ORAL ANSWERS TO QUESTIONS

CABINET OFFICE

The Minister for the Cabinet Office was asked—

Civil Service (Union Facility Time)

Matthew Offord: What steps he is taking to control the amount of trade union facility time in the civil service.

Karl McCartney: What steps he is taking to control the amount of trade unions facility time in the civil service.

Alun Cairns: What steps he is taking to control the amount of trade union facility time in the civil service.

Francis Maude: At the time of the last general election, there was no proper monitoring of trade union facility time in government. That has now changed, and paid time off for any trade union activities and full-time union officials now requires the specific consent of a senior Minister. We expect the cost to the taxpayer for paid time off for trade union duties to fall by 60% from the level we inherited.

Matthew Offord: I am very reassured by the Minister’s response, but will he outline to the House how much money has been saved as a result of those reforms?

Francis Maude: So far, by reducing significantly the number of full-time union officials who are paid by the taxpayer as civil servants, we have saved more than £2.3 million just from that element of the reforms. Overall, we are on course to meet our benchmark of spending no more than 0.1% of the civil service pay bill on facility time.

Karl McCartney: Further to the kind answers that my right hon. Friend has given, will he tell the House how many civil servants were given paid time off to attend the Public and Commercial Services Union conference this year and last year?

Francis Maude: In May this year, 651 PCS reps had paid time off to attend the PCS conference—fewer than half the number of the previous year. Next year, paid time
	off to attend the conference will be entirely at the discretion of the Secretary of State or the Minister in charge of that civil servant’s Department.

Alun Cairns: This issue is a significant cost to the public purse. Will the Minister please advise the House how many taxpayer-funded trade union representatives there were in May 2010, and how many there are now?

Francis Maude: It has taken some time to establish the facts about that because there was no proper monitoring. We believe, however, that in May 2010 in the region of 250 civil servants were full-time officers of their trade union and doing no work on behalf of the taxpayer. Several of them had been promoted in post while doing no work as a civil servant—and one of them had been promoted twice, which seems remarkable.

Ian Lavery: It is clear that the Minister has planted these questions in order to union-bash again, which seems to be something he relishes. Is he man enough at this point to say how beneficial trade unions are in the workplace in terms of the economy, the taxpayer and the employer?

Francis Maude: I have always been at pains to say that there is benefit to the employer in having union representatives in the workplace. What is not acceptable, however, is having those representatives uncontrolled, unmonitored and growing like Topsy, to the extent that they were costing the taxpayer £36 million a year at a time of financial stringency caused by the grotesque budget deficit we inherited from the Labour party. That is completely unacceptable.

Barry Sheerman: The Minister knows that I have a lot of time for him, and I congratulate him on winning a famous design award for his Department recently. However, I am a proud trade unionist and member of Unite, and I am a proud Co-operator. In a democratic society in which unions have an important part to play—as does the co-operative movement—why is there a feeling coming from the Government Benches that they are out to get us?

Francis Maude: I am certainly not out to get the hon. Gentleman, for whom I have—if I may return the compliment—a great deal of respect. I have never said that there is no role for trade unions or for trade union representatives having paid time off in the workplace. I have always stressed that there is value for the employer in the ability to have disputes resolved quickly, effectively and at local level. What was going on in the civil service, however, was way out of line with any other workplace, even in the public sector. The taxpayer is entitled to expect that the Government will grip that issue, which, for the first time, is being done.

Shared Services Programme

Alan Beith: What assessment he has made of the effect on small towns of outsourcing under the shared services programme.

Francis Maude: Our assessment showed that any employment impacts arising from outsourcing are likely to be substantially mitigated through redeployment. I expect that additional new employment opportunities will be generated through what I hope will be a thriving UK-based service provider that will result from the joint venture we have created.

Alan Beith: Does my right hon. Friend recognise that offices in rural locations, such as the Alnwick DEFRA office, can be excellent locations for shared back-office services because they have good staff and low staff turnover? Will he therefore do all he can to encourage the public-private partnership company to make sure that the Alnwick location is used, either for its existing work or for alternative work in the field?

Francis Maude: I absolutely take the point that my right hon. Friend makes. It is very well made. I know that the new joint venture company will look very carefully at all the implications. It will want to be able to do the work effectively and to create a new provider in the marketplace that has the opportunity to create more jobs rather than lose jobs. I know that he will talk to the new company and that it will want to hear his views.

Government ICT Strategy

Nick Smith: What recent progress he has made on the Government ICT Strategy.

Nick Hurd: We have created a world-class Government web presence. We believe that we saved £500 million in 2012-13 through better IT spend controls, and our digital by default strategy is transforming 25 of the most significant Government transactions by making them easier for users and cheaper for taxpayers.

Nick Smith: Meanwhile, in the real world, the new Army recruitment contract with Capita is a shambles. Why did the Government not plan the ICT better so that the new recruitment processes and Ministry of Defence systems worked better?

Nick Hurd: I have to tell the hon. Gentleman that the real world we inherited was an absolute shambles in terms of how Government managed IT transactions. His is the party that gave us tax credits and the NHS IT system. What we have done is to put in proper controls and create the conditions in which smaller and leaner organisations can come in and offer better value.

Bernard Jenkin: May I commend my hon. Friend the Minister and the Minister for the Cabinet Office and Paymaster General for the excellent work they have done in ICT? But is it not still ludicrously impossible to get around the silly Treasury rules about recruiting, retaining and rewarding the necessary staff with the necessary expertise to be the single responsible owners with continuous oversight of projects? Does that not show that civil service reform has not gone nearly far enough, and that that justifies a commission on the future of the civil service that only Parliament can provide?

Nick Hurd: I recognise my hon. Friend’s consistent commitment to the idea of improving the capability of the civil service. However, I do not think I agree with his premise, and I invite him to visit the Government’s digital service because he will see a department that feels unlike any other in Government. It is full of extraordinary talent that has come in to work for Government, often at below market rates, because they want to make that difference.

Chi Onwurah: The arrogant complacency of the Minister’s answers shows just how out of touch he is. Some 80% of Government interactions take place with the bottom 25% of society, but only 15% of people living in deprived areas use a Government service online. The promised assisted digital provision is still nowhere to be seen, locking our citizens out of his digital democracy. That is why Labour has announced a review of digital government, to make it work for the many, not the few. Is it not time that he did the same?

Nick Hurd: Again, we absolutely will not take any lessons from the Labour party about digital government. We are committed to the idea of transforming the great digital service. The feedback has been tremendous so far, and we have a hard commitment that every transformation will be accompanied by an assisted digital programme.

Philip Hollobone: Kettering borough council, of which I have the privilege of being a member, is having great difficulty in complying with the Cabinet Office protocols on e-mail traffic with local government. May I arrange a meeting with the Minister and a representative from the authority so that we can get this sorted out?

Nick Hurd: I have heard that from other sources, not least in my own local authority, so I am happy to take that matter up with my hon. Friend directly.

Charities

Jim Cunningham: What steps he is taking to increase the number of people involved with charity.

Nick Hurd: Our recent report encouraging social action set out what we have done to make it easier for people to give time and money, and I hope that the hon. Gentleman will join me in welcoming the news that volunteering has risen sharply since 2012 after years of decline.

Jim Cunningham: I hope the Minister will elaborate further. Only 9% of people are responsible for giving two-thirds of donations to charity. Will he elaborate on his previous answer?

Nick Hurd: The hon. Gentleman makes an important point and he is right to say that we rely on an extremely generous minority who do most of the giving. Britain has risen in the league table and is now the sixth most generous country in the world. Millions of our fellow
	citizens and constituents give time on a regular basis, and volunteering has risen since 2012 after years of decline. We think we have made a contribution to that.

Gary Streeter: May I add my support for the many people who volunteer to support charities? Does my hon. Friend agree that the investigation by the Public Accounts Committee into the pay of senior executives of charities is a good step in the right direction to ensure that volunteers are following people who are being reasonably paid?

Nick Hurd: I certainly agree that our voluntary sector relies on trust and integrity, and there should be transparency on administration costs and salary expenses. Individual salary pay is not an issue for Government; it is an issue between trustees and donors.

Gregory Campbell: In any discussions the Minister may have with some of the main charities, will he debate with them the need for them to promote their work in a proactive way, while safeguarding against what some regard as assertive and over-aggressive actions by charity collectors who try to obtain direct debits on the street? There is concern about the level of assertiveness on the street.

Nick Hurd: We certainly do have those conversations with the chief executives of some of the largest charities. The activity the hon. Gentleman describes raises at least £100 million a year, so we cannot ignore that. We must, however, ensure that it is regulated effectively so it does not put people off and tarnish the brands of the charities we need to support.

Mary Macleod: Will my hon. Friend join me in thanking the many people in my constituency who work for charities and who volunteer? Will he update the House on what is happening in schools to encourage the next generation of young people to work for charities and volunteer more?

Nick Hurd: My hon. Friend is a great champion of the voluntary sector in her constituency. I am delighted to place on record my appreciation of volunteers across the country. As she points out, it is vital that we inspire the next generation. That is why national programmes, such as the National Citizen Service and the cross-sector and cross-party campaign—Step up to Service—we support to double the number of young people involved in regular volunteering are so important. I hope she welcomes them.

Voluntary Organisations

Gavin Shuker: What recent discussions he has had with charities and voluntary organisations on levels of demand for their services.

Andrew McDonald: What recent discussions he has had with charities and voluntary organisations on levels of demand for their services.

Nick Hurd: I have regular discussions with charities and voluntary organisations. The anecdotal evidence is that many are experiencing higher demand for their services. It is a
	challenging environment and we all know that. However, I am encouraged that charity income appears to be steady, volunteering is up, giving has remained stable and social investment has risen. It is challenging, yes, but there is good news out there.

Gavin Shuker: The Government expect charities and voluntary organisations to step in in many places where the state has pulled out. However, the Minister recently said:
	“frankly I don’t think the government does understand civil society.”
	Why did he say that?

Nick Hurd: Because for years, not least under 13 years of Labour, government and civil society did not mix or take the time to understand each other. Our commitment to open public service is not about replacing things but trying to create the space for charities and social enterprises to help us deliver better public services. There are different cultures and we have to take the time to understand each other better and make the process work better.

Andrew McDonald: A recent survey by The Guardian’s voluntary sector network revealed that 47% of respondents had no confidence in the Government’s approach to the third sector. Rather than just yet another failed relaunch of the big society initiative, would it not be better if Ministers started to actually listen to charities, large and small, to find out what support they need?

Nick Hurd: I have spent a lot of my time listening to charities and voluntary sector organisations over the past five or six years, and I would point out to the hon. Gentleman and the Labour party, which continues to talk down the sector, that the sector’s greatest asset, the British public, continue to support it more and more. Charitable giving has been steady through difficult times and levels of volunteering and social investment have been rising. The Government have done a great deal to make it easier for charities through difficult times.

Robert Halfon: My hon. Friend will be aware that Essex county council is currently consulting on the future of youth services and that some difficult decisions lie ahead. He is meeting the Essex county councillor concerned. Will he give every support possible to youth services in Harlow and do everything he can to support Essex council so that we can protect our youth services?

Nick Hurd: My hon. Friend has written to me about this matter, and I congratulate him on his work. I am committed to meeting the decision makers at Essex county council, as I met with decision makers in Cornwall yesterday. There is a very real issue about the future of youth services and why they have been so easy to cut, and I remain passionately committed to young people having access to high-quality youth work.

Richard Fuller: Church leaders in Bedford have been instrumental in setting up and operating the food bank there. With demand for food bank services increasing across the country, will my hon. Friend join
	me in meeting representatives from local churches in Bedford to understand the complex reasons why demand for food bank services is increasing?

Nick Hurd: I thank my hon. Friend for that question, because the Labour party tries to make far too many political points about food banks. The underlying issues are complex and their number is growing, and the Government are supporting them with investment through our social action fund. Food banks are a magnificent human response to difficult times, and we should place on the record our recognition of the work being done to support them across the country in responding to need.

Government Efficiency

David Hanson: What recent progress his Department has made on improving efficiency across Government.

Francis Maude: The efficiency and reform group supported Departments across Government to deliver savings of £5.4 billion in the first half of 2013-14, which was an increase of 73% on savings over the same period in the previous year. I am extremely proud of the hard work that civil servants across Whitehall have undertaken to achieve this success for the taxpayer.

David Hanson: Will the Minister tell me why the costs of the efficiency and reform group, which now employs 440 members of staff, have ballooned to £60 million? More importantly, will he tell the House today what he would not tell my hon. Friends on the Front Bench—how many people work there now and what is the cost?

Francis Maude: A lot of this work simply was not being done under the previous Government, but the predecessor organisations employed more than twice as many members of staff as the efficiency and reform group now employs, and the simple fact is that in the last financial year it was responsible, with its colleagues across Government, for delivering savings of more than £10 billion by eradicating waste left by the Government of which the right hon. Gentleman was a member.

Jonathan Ashworth: We know that universal credit will not be delivered on time, that £40 million has been wasted, that £90 million will be written down and that the IT system Agile was deeply inappropriate. The Opposition have learnt that Agile was used on the insistence of the Cabinet Office, so will the Paymaster General, who boasts of his efficiency drives, give us a full explanation of his Department’s role in this debacle and publish all guidance the Cabinet Office sent to the Department for Work and Pensions?

Francis Maude: Oh dear. Is that the best the hon. Gentleman can do? I suggest he read the report by the Public Accounts Committee on what went wrong with universal credit. The problems only came to the attention of the DWP because of a review commissioned by my right hon. Friend the Secretary of State for Work and Pensions.

Topical Questions

Stephen Metcalfe: If he will make a statement on his departmental responsibilities.

Francis Maude: My responsibilities are for the public sector efficiency and reform group, civil service issues, industrial relations strategy in the public sector, government transparency, civil society, cyber-security and civil contingencies. In that context, I would like to thank all those in the emergency services who did a brilliant job working to prepare effectively for and respond to the effects of last week and weekend’s storm surge. I am sure the whole House will want to send its best wishes to those adversely affected and our thanks to those who worked massively to prepare for it.

Stephen Metcalfe: May I take this opportunity to congratulate my right hon. Friend on the open government partnership conference held in London last month and ask what plans there are for the open government partnership for the coming year?

Francis Maude: We passed on our chairmanship of the open government partnership at the conference. I thank my hon. Friend for his remarks; it was very successful, with contributors and participants from civil society and from Governments right across the world. It was attended by a number of UK Ministers, including my right hon. Friends the Foreign Secretary and the Prime Minister. We hope that this will develop, with more Governments taking part and with a deepening of the relationship with civil society organisations in some countries where their life is not nearly as protected as the life of civil society organisations here. [Interruption.]

Mr Speaker: Order. The Minister is providing serious answers to serious questions, but I am not sure that he is getting the serious attention that he and I would think those answers warrant. Perhaps we could have a bit of order.

Michael Dugher: It was revealed in a leaked letter yesterday that the Minister for the Cabinet Office tried to use emergency powers to block a freedom of information request for the Government to publish the HS2 project assessment review from 2011, which he did because of “political and presentational difficulties”. Those who support HS2 in principle know that public confidence is vital. Concerns have already been expressed about accelerating costs because of the Government’s failure to get a grip on the project. Questions have been raised by the National Audit Office about the economic benefits. Will the Minister now publish that project assessment review?

Francis Maude: Under the last Government, when the hon. Gentleman resided in Downing street, information about the progress on major projects had to be extracted by force. Earlier this year, we published the ratings for all major projects. We did that voluntarily—the first time it has ever been done—and we will continue to do so. We are now the world’s leading Government on transparency, so lectures from the hon. Gentleman come pretty thin.

Tim Loughton: Given the continued funding pressures on youth services, will the Minister update us on how his Department is using the Positive for Youth policy to maximise resources for a better joined-up youth offer between local authorities, voluntary services and businesses to provoke young people’s engagement and a youth voice?

Nick Hurd: First, let me recognise my hon. Friend’s long-standing advocacy for young people and his authorship of the initial Positive for Youth programme. Yes, we are very concerned about cuts to youth services at the local level. The Cabinet Office is mapping exactly what is going on at the moment and stands ready to work with local authorities to help them comply with their statutory duty and work more creatively with other local partners in delivering fantastic opportunities for young people to develop themselves through access to high-quality youth work.

Mr Speaker: It is time for the lion’s roar. I call John Robertson.

John Robertson: Thank you, Mr Speaker. Following the question on outsourcing from the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), we have now passed £100 billion-worth of contracts to large companies that have absolutely no transparency. Is it not time to revisit the Freedom of Information Act 2000 to make sure that these companies do have the necessary transparency and are brought into the scope of the Act?

Francis Maude: The hon. Gentleman will know that my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who chairs the Justice Committee, presided over an inquiry into the working of the Freedom of Information Act 2000 and did not recommend that any such change should happen. The hon. Gentleman refers to large companies taking part in outsourcing, but one of the things we have done is to reduce the Government’s dependency on large companies by opening up procurement to small and medium-sized enterprises across the country, which was not even measured under his Government. We have made big steps—though not yet enough—to open it up to many smaller UK businesses.

Andrew Percy: Last week’s tidal surge devastated hundreds of homes in my constituency when our flood defences were breached by the Humber, the Ouse and the Trent. During that emergency, the real heroes in communities such as Burringham and South Ferriby were—apart from the emergency services—our parish councils, which had in place emergency plans that ran 24/7. Will my hon. Friend pay tribute to those parish councillors and urge other such councillors to ensure that they have proper community emergency plans in place?

Francis Maude: My hon. Friend is completely right: there was an amazing community response to the emergency caused by the storm surge. He is quite right that parish councils, particularly in rural areas, play an incredibly
	important role in a completely voluntary way. I would also like to pay tribute to my hon. Friend, who I understand was out there in the small hours of the morning, working alongside his constituents to support them.

Margaret Ritchie: Can the Minister tell us what proportion of the files subject to the 30-year rule the Department has released to the National Archives, and how many of them relate to Northern Ireland?

Francis Maude: Not off the top of my head, but I will write to the hon. Lady and let her know.

Iain Stewart: May I invite my right hon. Friend to visit Matrix SCM at Milton Keynes and see how it is helping local authorities to save an average of 17% on public procurement contracts, increase the number of small and medium-sized enterprises winning those contracts, and speed up the payments process?

Francis Maude: I shall be happy to do that. I know how much support my hon. Friend must have given the company in his constituency. We have opened up procurement, which was being run in a way that, in many cases, froze out SMEs and prevented them from doing work for councils and the Government, but, although we have made some progress, we still have much more to do.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Stella Creasy: If he will list his official engagements for Wednesday 11 December.

David Cameron: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Stella Creasy: I am sure that the Prime Minister is as concerned as Labour Members are about the 42% increase in long-term unemployment among young women that has taken place on his watch. Will he confirm that the reason he does not support the No More Page 3 campaign is that, like his hon. Friend the Member for South Dorset (Richard Drax), he believes that at least page 3 provides jobs for the girls?

David Cameron: We have seen quite a rapid reduction in unemployment over recent months under this Government, and there are a million more people in work than when I became Prime Minister. Of course, there is a lot more to be done to get the long-term unemployed, in particular, back into work, but the Work programme is performing twice as successfully as some of its predecessors. I think that the hon. Lady should get behind such programmes, rather than making points such as the one she has just made.

David Burrowes: Last Tuesday Joshua Folkes, aged 17, died in my constituency following a knife attack. Serious youth violence has fallen by some 19% in Enfield, and the Government have toughened knife laws, but what more can be done to rid the streets of Enfield, and those elsewhere in the country, of the carnage caused by knife attacks?

David Cameron: My hon. Friend makes a very good point in speaking on behalf of his constituent. As he has said, we have toughened the law, and I think that that has made a difference, but I think that the most important thing for us to do now is get rid of this dreadful culture of people carrying knives and educate young people about the dangers of carrying them. Those who carry knives often end up being stabbed themselves, and sometimes tragically die. It is to that work that we should now give priority.

Edward Miliband: Does the Prime Minister agree that, given the crisis in living standards that ordinary families are facing, Members of Parliament should not be awarded a pay rise many times above inflation in 2015?

David Cameron: I do agree with the right hon. Gentleman about this issue. I think that it would be wrong for MPs to be given a big pay rise at a time of public sector pay restraint. All three party leaders agree on that, and we have all made the point to the Independent Parliamentary Standards Authority. However, we should be clear about the fact that what IPSA has said is not a final recommendation.
	Let me briefly make three points. First, I think that the idea of an 11% pay rise in one year at a time of pay restraint is simply unacceptable. Secondly, I think that IPSA needs to think again, and that unless it does so no one will want to rule anything out. No one wants to go back to the system of MPs voting on their own pay, but we must have a process and an outcome that can build public confidence. Thirdly, I think that all this should be accompanied by a cut in the cost of politics.

Edward Miliband: I am glad that the Prime Minister agrees with me about this issue. Does he also agree that we should not let it hang around as an issue until after the general election, and hang over trust in politics? May I urge him to work with me, on a cross-party basis, to find a way of making IPSA think again, and to stop this package happening?

David Cameron: My door is always open to the right hon. Gentleman, and I am always happy to discuss this or, indeed, any other issue. Let me stress, however, that what IPSA has said is not a final recommendation. I think that if the three party leaders and others in the House unite in saying that it is not right to award this pay rise, that will be the strongest message we can give.

Edward Miliband: I agree with the Prime Minister, but I hope he agrees with me that waiting and seeing will not work and that we do have to get together to deal with this. The reason this is not the right time for this pay rise is that most people are going through the biggest cost of living crisis in a generation, and I want
	to turn to that cost of living crisis. Last Thursday, the Chancellor claimed living standards were rising. That just is not the case, is it?

David Cameron: Let me add one point on the issue of MPs’ pay. This Government have shown respect for the difficulties people face: when we came into office we cut Ministers’ pay by 5% and froze it for the whole of the Parliament. That is not something Labour did.
	The right hon. Gentleman wants to get on to the economy and, frankly, after last week’s exchange I cannot wait to get on to the exchange on the economy. We discovered a new duo: red Ed and redder Ed. I am looking forward to discussing these things. I thought the Institute for Fiscal Studies put this very clearly. It said: we have had a great big recession. We have had the biggest recession we have had in 100 years. It would be astonishing if household incomes had not fallen and earnings had not fallen, but the fact is that is the legacy of what Labour left us. The right hon. Gentleman’s entire approach seems to be: “We made the most almighty mess, why are you taking so long to clear it up?” Well, we are clearing it up.

Edward Miliband: In case the right hon. Gentleman has forgotten, he has been the Prime Minister for three and a half years. But I think we are making progress, because last Thursday the Chancellor said that living standards were rising. [Interruption.] His own Office for Budget Responsibility says:
	“Almost whichever way you look at it…average earnings, wages and salaries…the levels have been falling”. [Interruption.]

Mr Speaker: Order. Mr Blenkinsop, you are yelling across the Chamber. Be quiet. Calm yourself. Take up yoga.

Edward Miliband: The OBR went on to say that it is “inconceivable” to suggest otherwise, but that is exactly what the Chancellor did last Thursday. Why will the Prime Minister not just come out and admit it: there is a cost of living crisis in this country?

David Cameron: Well, it comes to something when the right hon. Gentleman is being heckled from his own side. I do not know how you are going to keep us all in order, Mr Speaker.
	I will tell the right hon. Gentleman what has been happening over these three years: we have got the deficit down by a third, we have got 1 million more people in work, we have got 400,000 more businesses operating in Britain, and we have got one of the fastest rates of growth now of any major western economy. But the truth about living standards and the cost of living is this: if we do not have a long-term economic plan to get our economy moving, we do not have a plan to deal with living standards. We have a plan. Our plan is to keep interest rates low, to get the country back to work, to cut people’s taxes, to boost business. Our plan is working. The right hon. Gentleman does not have a plan, as we discovered last week, apart from more borrowing, more spending, more taxes—all the things that got us into the mess in the first place.

Edward Miliband: Utterly complacent and out of touch with the country—that is this Prime Minister absolutely all over. Let us be fair to him: he does understand that some people are really struggling because today we learn of his plan to cut the top rate of tax
	further, from 45p to 40p. Can he explain why he is even contemplating a further tax cut for millionaires, who have received hundreds of thousands of pounds-worth of tax cuts, when ordinary families are so squeezed?

David Cameron: The top rate under this Government is higher than at any time when the right hon. Gentleman was in the Cabinet, the Government or was working in the Treasury trying to wreck the economy in the first place. If he wants to talk about the cost of living, let us compare our records. The Labour Government doubled council tax; we have frozen it. They put up petrol tax 12 times; we have frozen it. They put up the basic rate of pension by a measly 75p; we have increased it by £15 a week. I am happy to compare our records any time of day, but the British public know this: if we want to sort out the cost of living, if we want to help families, we need more jobs, we need more growth, we need a long-term economic plan. We have got one; he has not.

Edward Miliband: I will tell the right hon. Gentleman what happened—[Interruption.]

Mr Speaker: Order. Members must calm down. I have said that before, but some people are slow learners. We will go on for as long as it takes. They can shout and scream and bawl in the most juvenile manner, but we will just keep going.

Edward Miliband: I will tell the right hon. Gentleman what happened. Under the last Labour Government, real earnings went up £3,600. Living standards went up: under him, they are down £1,600. Living standards are down under this Government. We have always known how out of touch he is, but he is now taking it to a whole new level. The Government are in denial about the cost of living crisis, and they are not satisfied with one millionaires’ tax cut—they think it is time for another. Once again, the Prime Minister proves that he stands up for the wrong people.

David Cameron: Oh, dearie me! At the end of six questions, we are back to denial and the record of the last Labour Government. I know that I have had a long flight, but I could not have written the script better if I had done it myself. The last Labour Government gave us the biggest budget deficit virtually anywhere in the world, and the biggest banking bust anywhere in the world. They created a giant mess that this Government are clearing up. That is the truth. Since the autumn statement, why cannot the right hon. Gentleman mention the fact that business optimism is up, manufacturing is up and the number of job vacancies is up? Pretty soon, we will be able to add two to that list.

James Morris: Unemployment in my constituency is 21% lower than it was at the time of the last election. We have had a 90% increase in apprenticeship start-ups, manufacturing output is up and business activity is at a 32-month high in the west midlands. Does the Prime Minister agree that, due to the hard work of my constituents and people across the country, the Government’s long-term economic plan is working and delivering benefits to every region of the United Kingdom?

David Cameron: My hon. Friend is right. During the boom years, the number of people employed in the private sector in the west midlands actually went down, but we are now seeing better news. Employment is up 25,000 since the election, with private sector employment up 14,000 this year. The youth claimant count is falling in the west midlands. I know how much time my hon. Friend puts into things such as the apprenticeship fair that he held earlier this year. This shows that our long-term plan is the right plan, and that it is beginning to work.

Stephen Doughty: What does the Prime Minister have to say to women across the country who are working full time and whose disposable incomes have fallen by an average of almost £2,500 since his Government came into office?

David Cameron: The first thing to say is that we welcome the fact that there are more women in work than at any time in our history. The second thing to say is that, because we are lifting the first £10,000 that people earn out of income tax, they will be better off by £705 next year. That is progress, but if the hon. Gentleman is asking whether it takes time to recover from the mess left by his party, the answer is yes it does, but we are going to do it.

Paul Burstow: Dementia is the disease most feared by the over-50s in this country. The Government are rightly doubling investment in dementia research during this Parliament, and the Prime Minister is hosting the G8 summit on dementia this week. Will he now lift the country’s and the Government’s sights by committing to doubling again this country’s investment in dementia research?

David Cameron: I am grateful to my right hon. Friend for that question. He is absolutely right to say that this is a real challenge facing not only this country, where there are 670,000 people suffering from dementia, but the whole world. We are having the G8 conference today in London to share intelligence, expertise and scientific research and learn lessons from each other. And yes, I can confirm that this Government are already planning to double research into dementia up to 2015, and we plan to double it again thereafter.

Dan Jarvis: Given that the implementation of universal credit has become a shambles, how can the public have confidence in those who are responsible for it?

David Cameron: I think it is absolutely right that we introduce this benefits system in a very slow and deliberate way. I remember sitting in my surgery as a constituency MP when the tax credit system came in, in one big bang, and having case after case where people’s household finances were completely wrecked by the last Labour Government. I will not let that happen again. As we introduce this vital benefit, let us remember the fact that 480,000 fewer people are on out-of-work benefits and it is this Government who are making work pay.

Stephen Metcalfe: Does my right hon. Friend agree that the best way to raise the living standards of my constituents is
	for the Government to stick to their long-term plan to rebuild this economy and not abandon it in favour of more borrowing and more taxes, as proposed by the Labour party?

David Cameron: My hon. Friend is entirely right. The biggest hit to living standards would be if we let spending and borrowing get out of control and interest rates went up. That is what we want to avoid, which is why we got the deficit down, and we must continue with our difficult spending decisions. That has enabled us to cut the taxes of people working and living in Basildon. By next year, with the first £10,000 of income coming out of tax, people on the minimum wage who are working a full-time week will see their income tax bill come down by two thirds. That is real action on the side of people who work hard.

Michael Meacher: Is the Prime Minister aware that FTSE 100 directors now get £86,000 a week on average, while at the other end of the scale 5 million workers get less than the living wage and three quarters of a million people who cannot get a job and get sanctioned get nothing at all and are left to starve? Is there no end to the brutality and nastiness of Tory Britain?

David Cameron: I say to the right hon. Gentleman, who served in Labour Government after Labour Government with a 40p tax rate—it is now 45p—and a bonus bonanza in the City 85 times higher than it is now, that he has a lot of brass neck.

Greg Mulholland: New figures show that the second largest pub company in this country, Punch Taverns, overcharged the British consumer in its pubs, on beer alone, by £4.3 billion over 10 years. Clear market manipulation is taking place, so will the Prime Minister commit to deal with this crony capitalism? Will he listen to the Federation of Small Businesses and back the Business, Innovation and Skills Committee’s solution to this problem?

David Cameron: I know of my hon. Friend’s long-standing interest in not only beer, but pubs and how pub landlords are treated, particularly by the pub companies. Let me look very carefully at what he said. I am a great believer in a healthy pub industry. Pubs are often the heart of the village and the heart of our communities, and I will look carefully at the beer report that he mentions.

Jonathan Edwards: During his autumn statement, the Chancellor said that
	“people should expect to spend…a third of their adult lives in retirement.”—[Official Report, 5 December 2013; Vol. 571, c. 1106.]
	Given that life expectancy in some communities in my country is only 75, what does the Prime Minister think would be a fair retirement age in a Welsh context?

David Cameron: The point my right hon. Friend the Chancellor was making is that this should be assessed independently but it is right to set a guide—an expectation—rather than just having Ministers announce from time to time what retirement ages should be. If the
	point the hon. Gentleman is making is that we need to tackle health inequalities better in our country and that we need ring-fenced budgets for public health, as this Government have brought in, then I would agree with him.

Jackie Doyle-Price: Bomber Command veteran Stan Franks recently passed away at the age of 88. As a teenager, he flew some 31 missions, a staggering achievement for such a young man. Will my right hon. Friend congratulate the Thurrock RAF Association and the Thurrock Enquirer on their efforts in raising the funds to ensure that his passing is marked appropriately?

David Cameron: I would certainly praise all those in Thurrock who have raised money in this way. The story of Stan Franks is a truly remarkable one. He is believed to be youngest airman to complete more than 30 missions—he did this in 1944-45, before he was 20 years old. It is a real reminder to our generation of just how much previous generations put in to make sure that we could live in freedom. One of the greatest privileges I have had in this job has been welcoming veterans of Bomber Command to No. 10 Downing street and making that announcement about ensuring that they have that clasp on their medal, which I know many value so much. As Winston Churchill rightly said in 1940:
	“The fighters are our salvation but the bombers alone provide the means of victory.”
	We should never forget those brave crews in Bomber Command. So many now are coming to the end of their lives—so many who did so much for our country.

Mr Speaker: I call Mr Tom Harris.

Hon. Members: Bomber Harris!

Tom Harris: A great start. I thank the Prime Minister for saving my marriage. Carolyn was just about to sign the divorce papers when she heard the report that if we stayed together we would be in line for a sweet £150 a year tax break. If, as the Prime Minister says, marriage must be underpinned by the tax system, why is it that, since the married person’s tax allowance was abolished in 2000, the divorce rate has gone down?

David Cameron: I am delighted that happiness is maintained in the Harris household. I could put it another way. It was only when I started to talk about the married couple’s allowance that the Leader of the Opposition tied the knot. The tax system moves in mysterious ways.

Peter Lilley: In the light of the call by the Leader of the Opposition for urgent action in response to the Independent Parliamentary Standards Authority’s proposal for an increase in MPs’ pay, will my right hon. Friend immediately retable the Boundary Commission report, which would simultaneously pay for any increase and increase the workload of MPs? It would surely be hypocritical for the Leader of the Opposition or the leader of the Liberal Democrats to oppose that measure.

David Cameron: My right hon. Friend tempts me. The point I was trying to make is that cutting the cost of politics has a role to play alongside this argument—[Interruption.]

Mr Speaker: Order. Members must not shout at the Prime Minister. It is discourteous to keep gesticulating at the man. Let us hear the Prime Minister.

David Cameron: It is no good shouting from the Opposition Benches. Labour Members had the opportunity to reform the Lords, and they were the ones who stopped it.

Mark Durkan: The Prime Minister says that the G8 and his attendance at the investment conference advertised his commitment to Northern Ireland and its economy. However, his Whitehall is busy removing jobs from Northern Ireland in the Driver and Vehicle Agency and now also in Her Majesty’s Revenue and Customs, with the proposal to close offices in Newry and Enniskillen and halve the office in my constituency of Foyle. How does the removal of jobs by Whitehall contribute to balancing both the economy in Northern Ireland and that region?

David Cameron: I understand why the hon. Gentleman makes his point. My hon. Friend the Exchequer Secretary will meet him to talk about the HMRC issues. As for the Driver and Vehicle Licensing Agency, the Department for Transport is still considering the results of its consultation. Let me make this point. Employment in Northern Ireland has risen by 32,000 since the election, and he knows, as I do, that the real long-term answer for the economy in Northern Ireland is a private sector revival. The public sector is very large in Northern Ireland. We need more small and medium-sized enterprises and more investment in Northern Ireland, and we need those jobs to come, which is what the G8 and the investment conference were all about.

Jeremy Lefroy: My constituent Jack Scerri, who has recently completed the National Citizen Service programme, visited my surgery on Saturday with Lisa Farrell of Staffordshire NCS to let me know just how much the programme had given him personal confidence and a clear sense of what he wished to do with his future. What plans does my right hon. Friend have for enabling as many young people as possible to take part in that transformative programme that he has championed?

David Cameron: I am grateful to my hon. Friend for what he has said. It is a transformative programme. Some 66,000 young people have already been through it since 2010. It now forms part of what Prince Charles wants to see—a decade in which we encourage volunteering and we get 50% of all young people taking part in volunteering. I hope that Members from all parts of the House are having an experience similar to that of my hon. Friend, with people stopping them and talking about the NCS and what it has done for young people and their confidence. It really is a good programme, and I am delighted that it has all-party support.

Fiona O'Donnell: As the Prime Minister is trying to come over all family friendly, can he confirm whether maternity and paternity pay will be included in the benefits cap announced in the autumn statement?

David Cameron: As the Chancellor announced at the time, what is out of the benefit cap is the basic state pension. I think that is important. On all other welfare spending, we need to ensure that we are distributing properly the different sorts of welfare.

Tony Baldry: Three hundred and thirty new jobs were created in my constituency in the past three months alone and I expect many more to be created over the next few months, particularly as housing and construction projects accelerate. Does my right hon. Friend agree that it is important that young people are not left behind and that abolishing the jobs tax on young people aged under 21 shows that the Government are serious about tackling youth unemployment?

David Cameron: I am grateful to my hon. Friend for what he says. As the economy recovers, it is vital that it is a recovery for all—that it is a recovery for north and south, for young and old. There is always a danger in an economy that young people who are not in the work force will be locked out of it, and that is why the change that the Chancellor announced about abolishing the jobs tax on those young people to make it cheaper for employers to take them on can have a real impact on ensuring that young people participate in our growing economy.

Dave Watts: Given the fact that the Work and Pensions Secretary was left alone on his Benches when he made his statement on universal credit, does the Prime Minister still have confidence in him and in the universal benefit changes?

David Cameron: I think the Work and Pensions Secretary has probably done more than anyone else in British politics to transform the debate about welfare. That is happening because of his dedication to the issue. We see fewer people out of work and the number of workless households at its lowest since records began. He is introducing a system that includes the benefit cap that Labour voted against and the household benefit cap that Labour voted against, and that is making work pay. We should be proud of that work.

David Nuttall: Does the Prime Minister agree that in the long term the best plan to improve the living standards of my hard-working constituents in Bury, Ramsbottom and Tottington is to continue to cut their income tax, which can only be achieved by a growing economy and by the Government cutting spending so that our country lives within its means and does not have to borrow every month to pay its bills?

David Cameron: My hon. Friend makes a very important point. At the end of the day, you can talk all you like about how you want to help people with their living standards and to keep their tax bills—[Interruption.] Is it not extraordinary? After last week, and all that, the shadow Chancellor is at it again—heckling. We learned something last week: he can dish it out but he can’t take it—[Interruption.]I will tell the House what is going down: his career. That is what is going down. The simple point is that if we want to get people’s taxes down, we have to make difficult decisions about spending. That is what we have done. That is why we can cut taxes, whereas the Opposition would have to put them up.

Frank Roy: In towns across the United Kingdom, there are parents in deep despair because they cannot afford a decent Christmas for their children. Why is that?

David Cameron: What is happening in our country is that we are recovering from the longest, deepest and most difficult recession in living memory. It takes time, but what we see is 1 million more people in work—that is a positive development. We see 400,000 more businesses operating in our country—that is a positive development. The growth rate in our country is now the second-highest of any major western economy. The job is not done yet; it is not halfway done yet. That is why we need a long-term economic plan, which is what we are dedicated to delivering. Frankly, we would get nowhere if the first thing we did was to increase spending, increase borrowing and increase taxes—all the things that got this country into the mess in the first place.

Nigel Evans: British Aerospace has 1,000 apprentices at any one time, and 221 in Samlesbury in the Ribble Valley and neighbouring Warton in Lancashire. What can the Prime Minister do to encourage other firms to follow the excellent example of British Aerospace and take on more apprentices, particularly in engineering and science? That would in itself encourage more youngsters to study those subjects in school and university.

David Cameron: I have seen with my own eyes what BAE Systems does in respect of apprenticeships, including higher level apprenticeships, and it is extremely impressive. We have to take action at every level. We have to make sure that more young people are studying science and maths subjects, and that is beginning to happen. We have to make sure that setting up apprenticeships is simpler. It must be less expensive. We need a culture where companies really want to get involved in this programme, including small companies, but we also need to attract more investment to our shores. That is why it is particularly good news today that GSK, one of the giants of the pharmaceutical industry, is announcing another £200 million invested into our country, because alongside engineering, life sciences is an area where Britain can win in the global race.

Meg Munn: When the House debated Syria in late August, the estimate of dead in the conflict was around 100,000. Just over three months later the estimate is over 120,000. We cannot allow this to become a conflict in a faraway land that we do not know anything about. Is it not time for the Government and, indeed, the whole House to urge greater action by the international community and show that we do care about the suffering of the Syrian people?

David Cameron: I absolutely agree with the hon. Lady, who has a long record of speaking out on this issue and believing, as I do, that Britain should be fully engaged in all the work to try to bring those involved in
	this dreadful war to the negotiating table, under the terms of the Geneva II process. At the same time, we must continue with the work that we are doing on humanitarian aid to help those who are suffering because of the conflict, but we should also, in my view and, I suspect, in hers too, continue to work with all those in Syria who want a free, democratic and pluralistic future. We must not allow the argument to develop that the only opposition in Syria is an extremist opposition. That will become the case only if we stop working with those who care about democracy in the future.

James Duddridge: In Rochford and Southend, employment is up, the number of apprentices is up and small business numbers are up, largely owing to the impact of the expanding Southend airport. I know the Prime Minister is probably a bit sick of airports, having just come back from one, but would he consider coming to Southend airport in the new year to celebrate its success Essex-style, bringing the family, if he wants? I promise to buy them all a Rossi ice cream on the sea front.

David Cameron: Who could resist the idea of an Essex-style celebration in the new year—although I might need to find out a little bit more of what it involves before I fully commit? We should not underestimate the importance of airports in driving regional growth. Clearly, that is the case in parts of Essex.

Steve Rotheram: Despite the Government’s savage cuts, next year Liverpool will host the international festival of business. Why will the Prime Minister not commit to attending the event? Will he ensure that the same level of support that Boris would enjoy is afforded to the mayor of Liverpool? Will he tell his green-eyed bête noir that despite a short sleepover in London, the Beatles are and always will be made in Liverpool?

David Cameron: Having happily visited the Beatles museum many years ago and enjoyed being there, I can confirm what the hon. Gentleman says. I have never had any problem working with the mayor of Liverpool and enjoyed appearing on a platform with him to advertise the brilliance of that city, and I will continue to co-operate with him in all the work that he is doing to attract investment into the city.

Martin Horwood: Abolishing roaming charges is one of the big wins for British consumers that we might get from remaining in the European Union. Has the Prime Minister had the opportunity to discuss international mobile phone usage with any other European Heads of Government in the past day or so?

David Cameron: You could say I have, in a roundabout way. It should be remembered that the television cameras are always on, but in my defence I would say that Nelson Mandela played an extraordinary role in his life and in his death in bringing people together, so of course when a member of the Kinnock family asked me for a photograph, I thought it only polite to say yes.

Points of Order

David Davis: On a point of order, Mr Speaker. In a named day question on 5 December this year, I asked the Attorney-General how many libel settlements, and of what value, the Crown Prosecution Service had made in each year between 2007 and 2012. I was given the answer that the CPS had made no libel settlements in that period. Unfortunately, in May 2008, in a case adjudicated by Master Eyre between Hardcash Productions and the Director of Public Prosecutions and the chief constable of West Midlands police, there was a settlement of £50,000 between the two defendants. I am certain, because I know him well, that there is nobody less likely to mislead the House than the Attorney-General. Therefore, he must be depending upon information given to him by the Crown Prosecution Service. If this House cannot depend on the organisation that is supposedly committed to promoting justice in this country to give us the truth, the whole truth and nothing but the truth, what can you do to defend us?

Mr Speaker: I am grateful to the right hon. Gentleman for his point of order. In the first instance, I can ask the Attorney-General to respond, and we will see what happens.

Dominic Grieve: Further to that point of order, Mr Speaker. I am grateful to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) for indicating to me a short time ago that he wished to make that important point. At the moment, I am not in a position to answer his question. He is absolutely right that the answer I gave him was based on information provided to me by the Crown Prosecution Service. He has given me some information that gives rise to a question as to whether that is accurate. I take that very seriously and the matter is being looked into urgently. When I have an answer, I will of course ensure that it is not only supplied to him, but made available to the House.

Mr Speaker: I hope that satisfies the right hon. Gentleman for today. I thank him for raising this important matter, which really is a public service. I am sure that clarity will be established, and hopefully very soon.

Gerald Kaufman: On a point of order, Mr Speaker. You will recall that recently I have twice raised the issue of the response, or lack thereof, to my correspondence from the Minister for Immigration. Following the point of order I raised last Monday, on which you ruled, and about which I remind the House, I have continued to receive letters signed not by the Minister for Immigration, but by Lord Taylor of Holbeach, against whom I have no resentment whatsoever. That continued until yesterday, so I asked my secretary to telephone the office of the
	Minister for Immigration to say that if I continued to receive letters that were not signed by him by Friday of this week, I would raise the matter on the Floor of the House. However, when my secretary made that call, the lady who answered said—I quote from my secretary’s note—that
	“this was noted but that it would not make any difference and that Lord Taylor will still be replying, as he does to other Members of Parliament.”
	I regard that response as a serious discourtesy from a civil servant to a Member of Parliament in any case.
	Mr Speaker, when you responded to my point of order last week, you said:
	“It should not be a matter of any controversy from now on. I hope that the Home Secretary can pass on the message to the Minister for Immigration and that the Minister for Immigration will behave in a seemly manner both towards the right hon. Gentleman and towards other Members.”—[Official Report, 2 December 2013; Vol. 571, c. 658.]
	I should add that two Cabinet Ministers have told me that as a rule they always reply in person to letters from Privy Counsellors. In view of the fact that what you described as a “seemly manner” is not being observed by the Minister for Immigration, I ask you to rule on the matter. Furthermore, with your permission, if I receive any more letters from Lord Taylor, I will send them to you.

Mr Speaker: I wonder whether the Leader of the House wishes to say anything now—or he and I can discuss the matter.

Andrew Lansley: indicated dissent.

Mr Speaker: The right hon. Gentleman is shaking his head. Perhaps we will have a conversation afterwards; I think that that in itself would be perfectly seemly.
	May I say for the avoidance of doubt, so that nobody thinks that I am sitting on the fence on this matter, which I most certainly have not done, that I think the concern expressed by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) is a reasonable one, and reasonable people should respond to it in a reasonable way, which, as far as I am concerned, means that he should get what he has reasonably requested. I am not sure whether something in the system is causing the problem or whether an individual is being obstinate, but it is not necessary. I think that the right hon. Gentleman, who has served in the House without interruption for 43 years and coming up to six months, should be treated with courtesy. He has not been, and I am sorry about that and hope we can put the matter right. I really do not want this matter to have continually to be raised on the Floor of the House. The reputation of the Department is at stake, and the Department must, frankly, raise its game. The Leader of the House and I can talk about it afterwards.

Surveillance of Telecommunications (Judicial Oversight)

Motion for leave to bring in a Bill (Standing Order No. 23)

David Heath: I beg to move,
	That leave be given to bring in a Bill to amend the Regulation of Investigative Powers Act 2000 and the Intelligence Services Act 1994 to ensure judicial oversight of the use of material derived from British citizens by means of surveillance of telecommunications; to make provisions concerning the operation of the Investigatory Powers Tribunal; and for connected purposes.
	Having unfortunately been on Capitol hill in Washington on 9/11 and in Aldgate on 7/7, I need no lessons on the threat to this country from terrorism and from those who wish to do us harm. I want to start my comments by paying tribute to the security services for all their hard work and the dangers they encounter on our behalf. I would include in that GCHQ, which provides invaluable information, often on the basis of fragmentary evidence, in supporting our safety.
	Any surveillance and any clandestine operation in an open, democratic society raises questions that cannot be answered by the agencies themselves or by the Executive but only by the legislature—by this Parliament. They are questions such as these: where are the boundaries between privacy and legitimate information gathering? What controls are in place to prevent either abuse or the suspicion of abuse? What are the limits to what inevitably has to be done in secret? What information is legitimately withheld? How does our legislation and, for that matter, our capability measure up to the ever-changing potential of technology? How effective is our parliamentary scrutiny? How comprehensive is the legal framework within which the security services work?
	It is only by asking those questions and, more importantly, coming up with answers that Parliament can ensure not only the safety but the protection of the interests of our citizens. Only by having adequate safeguards in place can we retain people’s confidence that what is being done is being done in an appropriate and proportionate way, and that they can safely use technologies where they believe they have a right to privacy without that privacy being invaded without good cause by the state.
	Recent revelations have, at the very least, called into question some of those suppositions, not—I make this clear having received assurances from Ministers—such that the security services are acting outside the law, but that the law is inadequate to meet the present circumstances. That is why my Bill proposes amendments to the legislation passed in 1994 and 2000 to fill in those gaps. Let us remember how far the technology has moved in those intervening years and the extent to which the use of social media, for instance, and various technologies is so very different from the circumstances in which that legislation was framed.
	We need to deal with not only the direct interception of communications, but the collection of communication data. Those metadata—the derivative data—that can be analysed are just as important, but I believe that the law is silent on that area. We also need to deal not only with what is collected directly by the United Kingdom
	agencies, but with the actions of overseas allies. We need to ensure that such material is subject to judicial oversight and on the terms of warranted action rather than those of subsequent review, which is a key difference.
	The Bill would enable the man or woman on the street to know that their communications were not the subject of inappropriate and disproportionate intrusion. Just as importantly, it would provide the legal framework by which the security agencies would ensure that they would not be subject to legal challenge in their essential work. No such framework exists at present.
	That review and updating of legislation is very necessary—those working within the security world agree about that as much as commentators on the outside, including the senior judiciary. If my Bill does not reach the statute book, I hope nevertheless that post-legislative scrutiny of the Regulation of Investigatory Powers Act 2000 will now be undertaken as a matter of urgency, because we need to answer some of these essential questions.
	Parliamentary scrutiny is critical. I salute the work done by the Intelligence and Security Committee, particularly the announcement of its forthcoming inquiry into these matters. How much stronger would it be, however, were it to be more properly constituted as a Select Committee chosen by this House and given the resource to do its job properly? That is something I advocated in government and I renew my plea now. I do not believe it is impossible to achieve the security clearances needed to ensure that information is not inappropriately shared while also following the selection procedures of this House. Other legislatures do it. The Americans do it. Why on earth are we incapable of following their example? I see no obvious reason.
	Finally, the Investigatory Powers Tribunal should be reformed to make its operation more transparent and the basis for its decisions more open. There are very good reasons—I understand that—for not revealing every detail of a strand of investigation or a technique that is at the disposal of the authorities, but a total lack of transparency and accountability for decision making is not the answer. I believe we can do better.
	As I briefly alluded to earlier, other countries are taking these matters very seriously indeed. I am struck by the work being undertaken by the Senate Committee led by Senator Feinstein in the United States. Its legislature is leading a very public debate on where the limits—the boundaries—ought to be set. We are not having that same debate in this country and I think that is because we in Parliament are not taking the lead that we should. I believe that we have a duty to do so.
	If we do not do that, I believe we will be failing our citizens and, incidentally, our security services. If we simply close our eyes to what are real issues with difficult answers, we will be letting down not only the public, but the people we ask to do these terribly difficult jobs. They cannot police themselves. They cannot do everything through better training or through being given better information because, at the end of the day, their focus is on doing the best possible job, not on setting the boundaries for their work, which is the proper job of Parliament.
	I believe that we owe it to all those with intelligence interests not just to visit, but to revisit the legislative framework regularly, because unless we do so it will
	never keep up to date with technological advances or keep pace with the techniques of those who would wish to harm us, let alone the techniques of those with whom we entrust our security.
	The Bill will at least allow us to debate the matter properly. I hope that it will also enable us to amend the law appropriately and to do the job that our electorate expect us to do, which is not just to give the security services the ability to ensure our protection, but to provide people with the security of knowing that there are boundaries provided by a framework of regulation and that those who necessarily work in a clandestine way will keep to those rules because that is the law.
	Question put and agreed to.
	Ordered,
	That Mr David Heath, Mr Dominic Raab, Mr Tom Watson, Dr Julian Huppert, Mr Elfyn Llwyd, Rory Stewart, Simon Hughes, Mr David Winnick and Caroline Lucas present the Bill.
	Mr David Heath accordingly presented the Bill.
	Bill read the First time; to be read a Second time on Friday 28 February 2014, and to be printed (Bill 143).

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Value Added Tax

That the Value Added Tax (Flat-rate Valuation of Supplies of Fuel for Private Use) Order 2013 (S.I., 2013, No. 2911), dated 18 November 2013, a copy of which was laid before this House on 18 November, be approved.—(Anne Milton.)
	Question agreed to.

Financial Services (Banking Reform) Bill (Money)

Queen’s recommendation signified.
	Resolved,
	That, for the purposes of any Act resulting from the Financial Services (Banking Reform) Bill, it is expedient to authorise:
	(1) the payment out of money provided by Parliament of:
	(a) any expenditure incurred under or by virtue of the Act by a Minister of the Crown or government department;
	(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided;
	(2) the payment out of the Consolidated Fund of any increase attributable to the Act in the sums which in urgent cases are payable out of that Fund under the Banking Act 2009;
	(3) the payment out of the National Loans Fund of any increase attributable to the Act in the sums payable out of that Fund under any other Act.—(Sajid Javid.)

Financial Services (Banking Reform) Bill (Ways and Means) (No. 2)

Resolved,
	That, for the purposes of any Act resulting from the Financial Services (Banking Reform) Bill, it is expedient to authorise:
	(1) the charging of fees on persons authorised under Part 2 of the Compensation Act 2006 for the purpose of meeting expenditure of the Office for Legal Complaints; and
	(2) the payment of sums into the Consolidated Fund.—(Sajid Javid.)

Financial Services (Banking Reform) Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),
	That the following provisions shall apply to the Financial Services (Banking Reform) Bill for the purpose of supplementing the Order of 11 March 2013 in the last Session of Parliament (Financial Services (Banking Reform) Bill (Programme)) and the Order of 8 July 2013 (Financial Services (Banking Reform) Bill (Programme) (No. 2)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion six hours after their commencement at today’s sitting.
	(2) The proceedings shall be taken in the order shown in the first column of the following Table.
	(3) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.
	Table 
	
		
			 Lords Amendments Time for conclusion of proceedings 
			 No. 41 Two hours after the commencement of proceedings on consideration of Lords Amendments 
			 No. 63 Four and a half hours after the commencement of those proceedings 
			 Nos. 1 to 40, 42 to 62 and 64 to 184 Six hours after the commencement of those proceedings

Subsequent stages

(4) Any further Message from the Lords may be considered forthwith without any Question being put.
	(5) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Sajid Javid.)
	Question agreed to.

Financial Services (Banking Reform) Bill

Consideration of Lords amendments

Mr Speaker: I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 35, 37, 40, 64, 149, 150, 162, 163, 169, 171, 172, 173 and 175. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the Journal.
	After clause 12

Part 4

Sajid Javid: I beg to move, That this House disagrees with Lords amendment 41.

Mr Speaker: With this we may take Lords amendments 42 to 62, 160 and 174.

Sajid Javid: It is a pleasure to introduce these amendments. Much work has been undertaken in this House and in the other place since my predecessor closed the Second Reading debate in March. That work has improved the Bill. The Bill has expanded greatly in length and content since it left this House. In large part, the variety of new issues that it covers reflects the Government’s acceptance of the vast majority of the recommendations that were made by the Parliamentary Commission on Banking Standards, which published its final report after the Committee stage in the Commons.
	I pay tribute to the members of the PCBS and especially those who sit in this House: my hon. Friend the Member for Chichester (Mr Tyrie), the right hon. Member for Wolverhampton South East (Mr McFadden), the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), the hon. Member for Edmonton (Mr Love) and my hon. Friend the Member for Wyre Forest (Mark Garnier). It was their hard work that led to the reports.
	I will speak in support of the amendments that resulted from the work of the parliamentary commission, but ask the House to reject the Opposition amendment that was made in the other place, Lords amendment 41. I will begin by explaining how the former amendments will deliver the goal of improving the standards of conduct in banking.
	The Parliamentary Commission on Banking Standards concluded that the current system for approving those who hold senior positions in banks, the approved persons regime, had failed. The commission’s central recommendation was the creation of a senior persons regime that applies to senior bankers. The Government accepted that recommendation. The amendments will deliver on the recommendation by putting in place a senior managers regime with five key features.
	First, the regime will reverse the burden of proof so that senior bankers can be held to account for regulatory breaches in their area of responsibility, without the need to prove that they were personally involved in the wrongdoing. Secondly, there will be mandatory statements of responsibility for senior managers. Thirdly, the regulators
	will be able to make conduct rules for senior managers in banks. Fourthly, there will be provision for time-limited and conditional approvals of senior bankers. Fifthly, the financial services register, which is kept by the Financial Conduct Authority, will state who is a senior manager in a bank and give details of the regulatory action that has been taken against them. The amendments will provide a clear and effective system for raising standards and increasing accountability among the country’s senior bankers.
	Lords amendment 53 introduces a certification regime for bank staff. That will apply to all staff below senior management level who have roles in which they could seriously harm the firm or its customers. The Prudential Regulation Authority and the FCA will therefore be given a far-reaching new power to make enforceable rules of conduct for all employees in a bank. Banks will have to verify that employees who have roles in which they could do significant harm to a bank or its customers are fit and proper for those roles. Banks will have to do that on appointment and annually thereafter. They will have to issue certificates, which may be electronic, to those employees, confirming that they are fit and proper for their role.
	The Government have always supported the spirit and substance of the commission’s licensing regime recommendations. However, we do not consider it appropriate to call it a licensing regime. That would imply that the individuals concerned had been given licences by a regulator. That is precisely the opposite of what the commission recommended. We therefore cannot use the words “licence” or “licensing”. It is in order to refer to “certificates” and “certification” because certificates will be issued by the banks. Banks will also have to notify employees of the banking standards rules that apply to them and take steps to ensure that they understand them.
	I would like to say something about the firms that are covered by the senior managers regime and the new obligations under the certified persons regime. The parliamentary commission naturally focused on banks. However, the definition was extended to include systemically important investment firms that do not take deposits, but that are regulated by the PRA. We have also included a power to extend the senior managers and certified persons regimes to cover UK branches of foreign banks and investment firms if it is considered appropriate to do so. Some large branches of foreign banks and investment firms operate from London, so it is prudent to equip ourselves to bring them into the new regime.

Neil Parish: Does the Minister agree that it is essential that companies can trust their banks in order that they can do business? We must get the legislation right so that companies can again trust their banks. Companies must feel able to give banks confidential information in the expectation that it will remain confidential. Companies need to be able to access finance to compete in business and create employment. The banks are holding back our businesses.

Sajid Javid: I agree wholeheartedly with my hon. Friend, and I hope that he agrees that all the effort that has gone into setting up this new regime—in particular the senior managers regime and the certification regime—is a huge step forward in achieving that aim.
	The Government are committed to bringing branches of foreign banks and investment firms that operate in London into the regime. At the same time, such a shift may be disproportionate for some small branches with few real decision makers, and the Government will consider the case for not extending the regime to such branches in due course.
	I do not accept Lords amendment 41 because it would do nothing other than rename the existing approved persons regime as a licensed persons regime—that is about all it does. It would not deal with problems with the existing regime identified by the Parliamentary Commission on Banking Standards, or deliver the improvements recommended by that commission. I assure the House that, under the Government’s approach, which is based on the commission’s recommendations, firms will have to certify that people who perform roles through which they could do significant harm to the firm or its customers are fit and proper to perform those functions. That will include ensuring that they have received suitable training and have any relevant qualifications required by the regulator. That will not be a one-off check; it will be done annually.
	The Opposition amendment would place all the burden of raising banking standards on the regulator. The PCBS concluded:
	“Banks should not be able to offload their duties and responsibilities for monitoring and enforcing individual behaviour on to the regulator or on to professional bodies. The tools at their disposal have the potential to be much more usable, effective and proportionate for the majority of cases than external enforcement,”.
	That is the approach the Government have adopted in their amendments. They place clear responsibility on the banks to ensure that anyone who is appointed to a post where they might cause significant harm to the bank or its customers, is fit and proper and able to perform their role. That will require consideration of the person’s qualifications, characteristics, experience and training, and the banks will have to consider each year whether that person is still fit and proper to continue in that job.
	The regulator will specify those functions that may cause significant harm to a bank or its customers in rules, and can specify what qualifications must be held by anyone appointed to that role. The bank’s implementation of that regime will be subject to monitoring by the regulators, who will be able to take enforcement action against any bank that does not meet requirements laid down by the regulators.
	The Government have worked tirelessly to replace the failed system of financial regulation we inherited from the previous Government. We supported the PCBS in its work and are implementing its recommendations. It seems that all the Labour party can offer at this point is a change of name. I therefore ask the House to reject Lords amendment 41.
	Another key recommendation of the PCBS is the introduction of a new criminal offence of reckless misconduct in the management of a bank. The introduction of such an offence means that, in future, those who bring down their bank by making thoroughly unreasonable decisions can be held accountable for their actions, which, as we have seen, can lead to severe economic disruption and considerable losses for taxpayers.

Emily Thornberry: With hindsight, will the hon. Gentleman help the House and say whether Fred Goodwin would have been prosecuted under that provision?

Sajid Javid: It is possible, although it is difficult to answer that question specifically as it would depend on the legal process, as anticipated in the Bill. As I progress with my remarks, the hon. Lady will see the kind of actions that can lead to prosecution.

Mark Garnier: Does the Minister agree that a lot of the changes that are coming through as a result of PCBS recommendations should in some respects be treated rather like the nuclear deterrent? It is not necessarily about trying to punish people; it is about trying to drive behaviour that avoids a crisis in the first place. Had these rules been around at the time, it is far more likely that Fred Goodwin would not have led his bank over the cliff, that we would not have had the financial crisis, and that we would have a more stable banking system as a result. That is the intention behind the proposed law.

Sajid Javid: My hon. Friend has explained well the reasoning behind the recommendation from the PCBS—which, of course, he was part of—and the deterrent effect this change could have should not be underestimated.

Emily Thornberry: I thank the Minister for giving way again; he is helpful in giving me the time because I am genuinely confused about this. If the proposed legislation is to have a deterrent effect and deter the sort of behaviour that was seen before the banking crash, had it been in place at the time, presumably people would have been prosecuted. All I want to know is: which people, and can the Minister give the House some examples?

Sajid Javid: As I discuss the issue I will provide more information on how the measure could work, and perhaps the hon. Lady will judge for herself, given the situation she has in mind, whether the measure would have acted as a deterrent, and whether a prosecution could have taken place.

Andrew Tyrie: First, I think it would be inappropriate to try to assess the impact of the proposed legislation on any specific case that has passed, and secondly, we are trying to devise legislation that will work for the future. I completely endorse what my hon. Friend the Member for Wyre Forest (Mark Garnier) has just said. We must emphasise that we expect a change and improvement in behaviour as a consequence of much more considerable risks and responsibilities being placed on those individuals than currently pertain with the approved persons regime and system of regulation.

Sajid Javid: I thank my hon. Friend for his comments. As Chair of the Parliamentary Commission on Banking Standards, he helps to explain the commission’s reasoning, which the Government share.
	The introduction of this offence means that, as we have heard, in future those who bring down their bank by making thoroughly unreasonable decisions can be held accountable for their actions, which, as we saw in
	the recent financial crisis, can lead to severe economic disruption and considerable loss for taxpayers. In line with the commission’s recommendations, the new offence will be applicable only to individuals who are covered by the senior managers regime I mentioned earlier. Senior managers could be liable if they take a decision that leads to the failure of the bank, or if they fail to take steps available to them to prevent such a decision from being taken.
	The offence will apply to behaviour that falls far below the standard that could reasonably be expected of a person in their position—that is similar, for example, to the test applied in corporate manslaughter. Importantly, the offence will apply to senior managers in banks, building societies and investment firms, and be subject to PRA supervision. That reflects concerns expressed by their lordships that the failure of systemic investment firms could lead to similar adverse consequences for financial stability, and that the taxpayer may have to bail out a collapsed retail bank. The maximum sentence for the new offence will be seven years in prison, and/or an unlimited fine. That reflects the seriousness that the Government, and society more broadly, place on ensuring that our financial institutions are managed in a way that does not recklessly endanger the economy or the public purse.

Andrew Love: The Minister struck the correct note when he mentioned the seriousness of such situations. Much concern has been expressed that this provision applies only to financial institutions, but the conditions that would have to apply for it to be used—in other words, a serious threat to the systemic nature of our financial system—are such that it is likely the measure will not be used often.

Sajid Javid: I completely agree with the hon. Gentleman and I think we all hope that the new criminal sanction will not actually have to be used because the offence will act as a genuine deterrent against such recklessness.

Emily Thornberry: If I were a senior banker to whom this law applied, what would affect my decision on whether to behave recklessly? Would it be the thought, “If I do this, there’s a risk my bank and the whole financial system will crash around my ears and I will be seen as personally responsible”, or would it be the possibility of being prosecuted under this new legislation?

Sajid Javid: Both cases would be a deterrent. A key point of the change to criminal sanctions is that they would apply if a senior manager took part in any reckless action—there is a very strong test, as we have just heard—that led to the failure of a bank. It would not be appropriate to perform a legal analysis of what has happened in the past because we do not have the full facts before us, but if a board full of senior managers makes a decision on, let us say, a potential acquisition and they fail to carry out proper due diligence or they deliberately ignore certain risk factors, and that eventually leads to a failure and collapse of that bank, that will be an example of the situation that the new offence tries to capture. It is reasonable to say that, as those senior managers will be aware of the new criminal sanction, which did not exist before, it will bear on their minds
	when they make those important decisions. The Government amendments in this group will improve standards and the culture in banking.

Cathy Jamieson: I have listened with interest to the Minister. May I first add my thanks to all the members of the Parliamentary Commission on Banking Standards, who have done us a great service in examining the issues in great detail? They include not only Members of this House but Members of the other place—the Archbishop of Canterbury, my noble Friend Lord McFall, Lord Turnbull and Lord Lawson. Other Members in the other place, including my noble Friends Lord Eatwell, Lord Mitchell and Baroness Hayter, have ensured that particular issues have been put on the agenda.
	It would be remiss of me not to say a few words about how we have arrived where we are today—considering a vast number of Lords amendments at this stage. The concerns about that have been well rehearsed during discussion of the Bill and how it has been brought forward and considered. The Government commissioned the Parliamentary Commission on Banking Standards to ensure that recommendations could be added to the Bill, but we had a very thin Bill for Second Reading and in Committee. The commission recommended a three-month gap between the publication of the Bill and the commencement of the Committee stage, but the Government rejected that idea. Instead, this House had to consider the partial Bill before the final report on standards and culture had been published. It is pertinent to reflect on that, given some of the comments made by the Minister. Many of the issues that will be taken forward when the legislation is enacted will still depend on judgments being made and on getting the message across that the culture of banking, at whatever level, has to change. That would have been helped by further scrutiny at various points.
	We must also remember that the Government’s response to the commission’s report was published only three or four hours before we started considering the Bill on Report. We had 183 amendments tabled during the next stage of the Bill, and I wish to put on record our concerns about that method of legislation. The Bill is now three times bigger than the one that was originally introduced, and consideration of Lords amendments took place only a couple of days after Third Reading—again, without much opportunity to consider matters in detail.

Gordon Marsden: My hon. Friend is detailing, forensically and importantly, the logjam that this process has produced. Does she agree that if we had had longer, organisations and groups outside the House, which feel very strongly on these issues, would have had more opportunity to make representations? The Government’s failure to allow that, by tabling these amendments as they have done, has circumscribed the public process.

Cathy Jamieson: My hon. Friend makes an important point. It is vital that the public has confidence in the process. The public need to know that the culture of banking will change; that we have given the Bill thorough scrutiny; and that we have considered and put in place
	every possible method to limit bad judgments and errors in the future. In the end, however, it will be down to individuals, and from my experience of various pieces of legislation I would always guard against the notion that any individual piece of legislation will guarantee that nothing will go wrong in the future. That always depends on individuals making judgments. It is important that we get the culture right so that individuals within it make judgments not just because they fear that they will be prosecuted and go to jail, but because they believe they are doing the right thing by their customers and by the wider economy.

Andrew Love: Before my hon. Friend moves on, does she agree that while we should congratulate Members in the other place on the role that they played in amending the Bill, it would have been correct to delay the Bill so that the House of Commons had proper time to scrutinise the changes recommended by the commission, rather than leaving that to the other place?

Cathy Jamieson: My hon. Friend makes a valuable point. It would have stood us in good stead had we had such an opportunity. I have only been a Member of Parliament for a relatively short time, and others will have much more experience, but it seems to me unusual to have so many amendments at this stage of a Bill. External bodies have made significant representations at this stage, which is also unusual and shows the strength of feeling about the issue of banking and its culture. It also shows that people have been thinking about how to future-proof the Bill, not simply to repair damage done in the past, but to ensure that we do all we can for the future. Some people may feel that this has been a tick-box exercise and a part of the process that does not matter as much, and it is rather sad if that has been the case.
	We know that we have a huge amount more to do. Only today we have seen the latest news about Lloyds bank being fined again. It is also fair to say that as the weeks and months have unfolded during the Bill’s passage, we have seen various situations emerge. I have written to the Minister on the recent issues on forex, and we have also had the sad events at the Co-operative bank and the outcome of investigations into the LIBOR rigging. Those all show that more issues may arise that will have to be dealt with properly, and we want to ensure that the legislation we put in place is able to do that.

Emily Thornberry: Is my hon. Friend satisfied with the definition of senior bankers as those who would be liable to be prosecuted? Is it sufficiently clear and is it felt that it covers those people who really would be directing proceedings?

Cathy Jamieson: My hon. Friend makes another interesting point. She has already raised the likelihood of criminal proceedings, and in that context the Minister made comparisons with other legislation. I was concerned about the comparison with legislation on corporate manslaughter, which my hon. Friend obviously knows a considerable amount about. We have to ensure that definitions are as tight as possible, so that things do not slip through the net at a later stage. I hope the Minister will be able to provide clarity on those concerns.
	We wish to ensure that Lords amendment 41, on professional standards, stays in the Bill. Earlier this year, the Government committed to implementing the main recommendations of the Parliamentary Commission on Banking Standards. Those recommendations included the creation of the new criminal offence of reckless misconduct by senior bankers. We want to ensure that that is as tight as possible. As the Minister outlined, the Government also agreed to introduce a new two-tier authorisation process for bank staff.
	Our concern is that the Government have consistently failed to go far enough on the professional standards required of bankers. When the Bill was first introduced, Ministers resisted, on three separate occasions, Opposition attempts to put tougher professional standards in the Bill. Introducing the proposal at an early stage would have allowed us the opportunity to debate and finesse it, if required. At that stage, we included proposals for an annual health check on senior bankers. Indeed, Labour first pushed for a licensing regime with an annual validation of competence during the Committee stage of the Financial Services Bill in March 2012, so we have been pressing this case for a lengthy period of time.
	Lords amendment 41 states that there needs to be
	“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct.”
	The recognised code of conduct is important. The then Minister, the hon. Member for Fareham (Mr Hoban), opposed the amendment, saying:
	“I…argue very strongly that the amendment is not necessary. In fact, it could have unintended consequences.”––[Official Report, Financial Services Public Bill Committee, 1 March 2012; c. 235.]
	I cannot recall what those unintended consequences he feared were. Given that the Government have now seen fit to change their view, I am sure they no longer have those concerns.
	A similar amendment was tabled again in April 2013 to this Bill and once again it was voted down by the Government. We on this side of the House never give up: if we think something is the right thing to do, we will come back and come back again. We tabled the same amendment again in July 2013, and again the Government failed to support it. We tabled the amendments because we believe that the persons we are talking about must have adequate standards of competence and integrity. The debate on managing the process and legislating for it may seem technical, but it is important for people in the real world to know that we are trying to introduce reforms. There has been a degree of discussion across the House, and I accept that, but people need to know that we are trying to introduce reforms that complement the attempts to change the culture of the banking sector.

Gordon Marsden: I am listening carefully to my hon. Friend as she lists the specific attempts that we on this side of the House have made to bring this into clear sight for the Government. Is it not worrying that the Government seem to have reacted as though we need do something only when the deathwatch beetle in these financial institutions has done its work and we need only press on the institution for it to collapse into powder? Unless we press the Government, there will be no mechanism to examine the process.

Cathy Jamieson: We pressed for an earlier introduction of the measure so that we could debate and finesse it if necessary. However, the Government were prepared to move only at the last minute, through a successful amendment in the other place, and it is disappointing that they now want to strike it down.

Stephen Doughty: My hon. Friend is making a strong case. I, too, served on the Committee and witnessed our efforts on this matter. Why have the Government been on the back foot throughout the process? We are talking about the culture of banking, but I wonder whether there is an issue with a Government culture of continual caution, rather than the challenge that ought to be presented to some of those interests in society that have failed our country.

Cathy Jamieson: I thank my hon. Friend for his comments. I do not know what was in the Government’s mind, but in Committee the Bill was very thin. We raised the matter on a number of occasions, but the Government resisted every attempt to amend the Bill in Committee, apart from on one minor detail. In retrospect, that is not the way to produce the best possible legislation. The Bill will undoubtedly have been improved by the end of the process—I do not detract from the work that has been done—but it would have sent a stronger message to the general public and the financial services industry that this place took the matter seriously if the Government had accepted amendments at an early stage.

Ian Swales: As a member of an accountancy body that deals with police professional standards and continuing professional development, I understand this issue. I also understand that the financial services industry is diverse, with many different roles. Has the hon. Lady tried to list all those roles and thought about what professional qualifications and standards are appropriate to each and every one?

Cathy Jamieson: I understand the hon. Gentleman’s point. Our approach has been to suggest that that responsibility lies, rightly, with the Financial Conduct Authority. It would not be for me, as a shadow Minister, to list those roles. In relation to the definition of a professional, it is important for people to have professional development, with qualifications, on a continuous basis. One fundamental issue for professions is an adherence to a code of conduct. We tabled amendments on that consistently because we believe strongly that that is important. The wider world wants to know that the banking industry culture has changed and that malpractice, which unfortunately is still coming to light, is being dealt with.

Andrew Love: As a member of the parliamentary commission, I note that despite our many recommendations, which my hon. Friend has illustrated, six years on from the credit crunch there are continuing difficulties with the culture of the banking system. Is it not the case that we need to do more to change that culture, and that we need to do it now?

Cathy Jamieson: My hon. Friend is absolutely right. If we believe the Bill to be the end of the story, we will do a disservice not only to the hard work done already,
	but to the industry and to the wider public. I hope the Minister and the Government will take that on board. We must always be vigilant and look to the future.
	The commission was unable to consider several areas, which no doubt will come before us in the future, concerning the culture of banking—not just in retail banking, but in investment banking and on the trading floors—and other areas on which I am sure there will be more to do. Millions of consumers have fallen victim to the mis-selling of products in the past 15 years, but although many have successfully claimed money back, the general public see only that those who sanctioned the products and oversaw their mis-selling have not necessarily been held to account. That will remain a concern. Despite the huge economic and social importance of the banking industry, there are still no uniform professional standards for bankers. As I pointed out earlier, those with responsibilities in other professions—teachers, lawyers, medical health professionals—must comply with certain professional standards and codes of conduct, which is important.
	There is concern that standards have not improved enough in the years since the initial banking crisis—as I said, we still hear of ongoing malpractice in the industry. Recent research from Which? has found that 65% of bank staff with a sales role say there is now more pressure than ever to meet sales targets and that almost half know of colleagues who have mis-sold products in order to meet their targets. It was reported today, in the context of the latest fine on Lloyds, that one bank employee sold products to his family and others in order to meet the incentives and not be demoted. If that is the case, it is exactly the kind of thing that the general public are concerned about.
	One in four of those surveyed said that targets drove employees to sell inappropriately. Surely there can be nothing more inappropriate than people feeling under that kind of pressure. The report also found that two thirds of people thought that bankers were unlikely to lose their job if they lied or cheated. Despite the tougher regime and legislation we are putting in place, the general public are not convinced. A similar proportion think that bankers are unlikely to lose their job if they fail to comply with industry codes of conduct and even if they deliver consistently poor service or receive a lot of customer complaints.
	Interestingly, given that we tried at various stages to introduce the concept of a fiduciary duty to look after customers, only 6% of people thought that bankers acted in the best interests of consumers. Only one in four felt that bankers were properly trained or qualified. Clearly, then, the industry has a long way to go to regain the public’s confidence. In discussing these issues, however, we need to think about those in the banking industry who are not making the big decisions at the top but are doing the front-facing work with customers. We must protect them and ensure that they are not put under pressure to sell or provide products incorrectly. On a wider issue, of course, we also need to protect the taxpayer from ever again having to bail out the banks.
	The Opposition are not alone in thinking that. Sir David Walker, the chairman of Barclays, said on 5 February 2013 in his appearance before the commission:
	“My view is that the best thing that could happen is for the Commission to say that it thinks that something like a banking standards board, designed to professionalise banking…be put in place and commend that as an initiative to be undertaken with urgency”.
	The chief executive of the Chartered Banker Institute told the commission on 14 January:
	“My predecessors tried to encourage banks and bankers to support professional qualifications and membership of professional bodies… I have tried in the past five years to say, ‘Look, in order to rebuild the banking industry, it’s fine to look at rebuilding regulatory structures and the structure of the industry, but the whole issue of culture and standards is one that is equally important.’”
	He said he had been trying to bring attention to that for the past five years and arguing for a re-professionalisation of banking.
	If the Minister does not wish to listen to us or those individuals, I should quote the Chancellor, who himself told the commission in February that we should develop the
	“kind of professional standards...that you see in the medical profession or the legal profession”.

Mark Garnier: Is the shadow Minister aware that the banks have already initiated the creation of a professional banking standards body?

Cathy Jamieson: I thank the hon. Gentleman for that comment. I know that he has done considerable work in his role on the commission, but it is important that these issues be put on the record. It would have been useful to consider them in Committee, and I mention them now to show that significant pressure has been applied to move things forward and bring about change. The Government appeared to resist that and some of the commission’s recommendations until, of course, their recent change of heart following their defeat in the other place on the amendment for the licensing regime. At that point, they felt they had to bring forward their own plans.
	The Opposition might have expected the Government to be reasonably gracious and accept the decision of the other place, but today they have tabled an amendment to disagree with and remove Lords amendment 41 from the Bill. To be fair, what they have tabled, under pressure to replace that amendment, is better than nothing, but it does not go anywhere near as far as the amendment they wish to strike out. The main difference essentially concerns the code of conduct. Lords amendment 41 states specifically that the
	“licensing regime must…apply to all approved persons exercising controlled functions, regardless of financial sector;…specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules”.
	That is important, given that the Government’s position does not call specifically for a code of conduct. In some ways, their regime legislates for the commission’s recommendations, but by failing specifically to legislate for an open and transparent code of conduct, they risk failing to address some of the ethical issues surrounding so-called casino banking. Their more permissive amendment does not focus specifically on a code of conduct.
	Several other hon. Members wish to speak, so I shall conclude with some brief comments about remuneration. As hon. Members might be aware, the Opposition have given considerable thought to the regulation of bankers’ remuneration, and there remain certain issues that the Government must consider before the general public can have confidence in the industry. The public find it difficult to understand, and have concerns about, the culture of high risk, high reward that was evident in the previous system and which contributed to the crisis.

Andrew Love: Does the banking industry not make it more difficult for the public to understand, given that, even in these difficult times, it has gone back to the massive bonus culture we have all been complaining about?

Cathy Jamieson: Once again, my hon. Friend is absolutely correct. The general public expected the industry to show some humility and make every effort not only to repay the taxpayer, where appropriate, but to reflect on its actions, perhaps take the view that this culture was now outdated and move on and operate differently.
	The general public’s concern will not be alleviated by the latest list of scandals. We have had LIBOR, EURIBOR, PPI—payment protection insurance—forex, yen LIBOR—the list seems to go on and on. Almost every day, every week, every month, something else is being put into the public domain. We have recently heard concerns about lending from RBS, with businesses having gone into administration. It is right and proper, of course, that these issues are investigated. We continue to talk about these issues, but however much we will things to change, people are concerned that if the bankers do not accept that their culture has to change, we will just continue to talk and put legislation in place, but without the messages having got through. I believe that the general public are particularly concerned about that.
	As I said, we believe that the amendment unsuccessfully launched in the other place should remain in the Bill. I am disappointed that the Government have chosen to disagree with it and want to strike it out. I do not expect the Minister to change his view at this stage. I am sure he will revert to the position held in Committee, which was to disagree with us on this matter.

Andrew Tyrie: Before addressing the amendments in the group, I would like to say a few words—this is the only and last opportunity to do so—about the work of the Parliamentary Commission on Banking Standards. The task that Parliament set it was
	“to consider and report on: professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process”
	and on
	“lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy…and to make recommendations for legislative and other actions.”
	That was a very large canvas. The backdrop was a profound collapse of trust in parts of the banking sector—triggered by, among other things, deep lapses in banking standards.
	We should bear it in mind, however, that the banks were only partly responsible for all these problems, and that the commission’s proposals represent only part of
	the solution. On the first point, responsibility for the problem also lies with regulators, central banks, Governments, auditors, risk-rating agencies and consumers, both retail and wholesale, who over-borrowed. They all need to take their share of the responsibility.
	On the second point—finding the solutions—the Banking Commission’s proposals need to be set alongside both reforms to the regulatory structure, such as the creation of the Prudential Regulatory Authority and the Financial Conduct Authority after the abolition of the Financial Services Authority, and the structural reform of the banks, as proposed by Sir John Vickers.
	I doubt whether the Government or the man who led the regulatory changes, Sir John Vickers—or indeed any member of the Banking Commission—thinks that, even taking together all the proposals we have put forward, we can solve everything. In any case, many on the commission were sceptical about the extent to which culture can be changed by legislation—a point made from the Front Bench earlier this afternoon. Legislation can, however, play an important role by incentivising good behaviour and penalising bad. Nevertheless, we concluded that, if fully implemented, our proposals should put us in a better place to protect taxpayers and the country from systemic risk and to protect consumers from lapses in standards.
	As the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said a few moments ago, there will continue to be regulatory failures, so only with the exercise of judgment and a good deal of vigilance are even these proposals likely to make a big difference in the long run. Our job today is narrower—to complete the task of making sure that those responsible for exercising that vigilance have the statutory tools to do the job.
	The Banking Commission made a number of far-reaching proposals. It has been a massive collaborative effort for and by Parliament and parliamentarians. I would particularly like to thank all the commissioners for their hard work, determination and ideas, without which virtually nothing could have been achieved. I see that two of the five Commons commissioners are in their places with us this afternoon. I would like to thank, too, the staff: the Clerks, those seconded from other work and the specialist advisers, all of whom worked long hours to deliver five reports in under a year. With respect to this specific legislation, I would like to thank our legal team—both former parliamentary counsel—for their professional help over the past few weeks.
	A measure of the scale of what we are trying to scrutinise this afternoon is the fact that the Bill went to the House of Lords 35 pages long but has come back to us with an extra 170 pages. I do not think that does much for parliamentary scrutiny of legislation—however important, necessary and urgent it might be. Is it so urgent that we could not have found more time for it?
	It was clear on Report that the Government’s commitment to implement our proposals was, frankly, somewhat lukewarm. Our first report was cherry-picked, and of the two other reports that had made recommendations, one, on proprietary trading, was ignored,
	and the other, the final report, received only a partial commitment for implementation. So I am delighted to report that there has recently been a dramatic change of heart from the Government. Over the past few weeks, this Bill has been transformed.

Cathy Jamieson: The hon. Gentleman mentioned proprietary trading. Is he now satisfied that the Government’s recent actions take account of all the commission’s recommendations?

Andrew Tyrie: Broadly, yes. Given that I am already stretching things a little in my opening remarks, I will try to deal with prop trading at the most appropriate parts of my speech—but the short answer is, as I say, broadly yes.
	The commissioners met yesterday to discuss progress. We believe that the Government have converted the lion’s share of the Banking Commission’s recommendations into statutory action, where required. It is worth listing what has changed. The following amendments have been made to the Bill in order to implement our recommendations: electrification of the ring fence has been considerably improved since Commons Report stage; an independent review of the ring fence, which can consider the full separation of the banking industry, has been introduced; the Banking Commission’s recommendations on prop trading, which we just discussed, have, for the most part, been implemented; the proposals for the senior managers regime have been improved; a certification or licensing regime has been added to the Bill; a proper definition of a bank—the Bill’s definition was defective when it left this place, and it was a major lacuna—has been added to the Bill; the PRA has acquired a competition objective to complement that of the FCA; and audit requirements have been tightened for systemically important firms.
	Furthermore, a good number of undertakings and assurances have been given in response to specific recommendations. Most importantly perhaps, the bank will almost certainly be given the Financial Policy Committee responsibility for the leverage ratio, and the Government have said that they will legislate to that effect after a review. We would otherwise have had to have to wait until 2017-18 to have that considered.

Andrew Love: Will the hon. Gentleman give way?

Andrew Tyrie: I give way to my fellow commissioner.

Andrew Love: How long does the hon. Gentleman think the handing of control over the leverage ratio to the Bank of England will take? Time is moving on, and we need to get there sooner rather than later.

Andrew Tyrie: I have pressed the Bank of England on that issue with my Treasury Select Committee hat on. A subsequent exchange of letters between the Governor and the Chancellor makes it pretty clear that by the end of next year the issue will be resolved and responsibility will lie with the Bank. Indeed, I think that for anything else to happen, given that exchange of letters, would be considered extraordinary, unless the review came up with some major obstacle that no one had previously spotted.
	Another important assurance has been given in respect of so-called special measures. We proposed the establishment of an intermediate tool between enforcement
	at one end of the spectrum and day-to-day supervision at the other, which regulators could use to keep an eye on banks and help to improve standards. The Americans have something of the kind, which is known as a memorandum of understanding. The Government said that the statutory underpinning that we proposed would not be necessary, but the regulators have now announced that they will produce a full and detailed guidance note after consultation, which will set out how the new tool will be created and administered.

Emily Thornberry: I am listening with great interest to the hon. Gentleman. As he may know, the United States operates a regime called the deferred prosecution agreement, under which an institution accepts that it has committed an offence and agrees to pay a large fine on the understanding that it will not be prosecuted. Part of the deal is that the institution must allow auditors in, and must change its behaviour. Is there a similarity between the DPA structure and the structure the hon. Gentleman is describing?

Andrew Tyrie: In some cases, the “deal”, as the hon. Lady called it, is accompanied by a memorandum of understanding, in order to achieve exactly the result that we intend by means of special measures. However, the primary purpose of special measures is to provide a tool that need not lead to escalation and full enforcement. That is a step back from the example given by the hon. Lady.
	We were also assured that there would be a review of the system of enforcement decision making, which is currently very unsatisfactory. We had proposed that the regulatory decisions committee should be separated further from the enforcement division of the Financial Conduct Authority and given statutory autonomy in relation to its decisions. The Government did not accept that proposal, but they did accept the need for the issue to be re-examined and the need for a fresh and independent pair of eyes to look at each enforcement action before it proceeds, and a review is now to be carried out.
	The important issue of remuneration was raised, later in her remarks, by the hon. Member for Kilmarnock and Loudoun. The PRA has committed itself to aligning the maturity of the rewards for bankers with the maturity of the risks that they have incurred. That is crucial. It is the collecting and taking of bonuses in return for the creation and selling of a new financial instrument or tool when, although the full risks will not mature for many years, the individuals concerned have had the money in advance that has created so many misaligned incentives and so much poor behaviour. Those individuals need to know, even several years later, that there may be a clawback, or, better still in most cases, that their bonuses are deferred. They need to know that the product had better be robust enough to survive the test of time before they start selling it.
	Let me now mention a few measures that the commission did not succeed in inserting in the Bill. I shall not describe any of them in detail—although I note that I when I have tried to deal briefly with the measures that I have described so far, Members have intervened to ask me about a number of them.
	Both the Select Committee and the commission concluded that the governance of the Bank of England was still in a mess, and would have to be sorted out. The Bank of England still has no board worthy of the name,
	and the cross-cutting lines of responsibility and accountability between various new institutions are, to put it mildly, very confused. One of the most senior people in the Bank told me recently that he thought the situation was like the Schleswig-Holstein question: the former Governor probably understood it, and one other guy had forgotten it—and the third was this person himself, whose name I had better not reveal on the Floor of the House.
	We also failed to achieve change with our proposal to abolish United Kingdom Financial Investments Ltd. UKFI has been exposed as a fig leaf: it seems to be of very little practical use. The Labour Government’s intention in introducing it was good, but when the Government want to intervene directly in the activities of institutions they simply do so, and UKFI does not seem to be performing the “buffer” function that was intended for it.
	We argued that the regulator should have a duty to compensate whistleblowers who had been disadvantaged by their firms. There are still risks, at least perceived risks, for whistleblowers, which will tend to deter them. It is a remarkable feature of the current crisis that there has been so little whistleblowing, and I am not yet convinced that we have managed to sort the matter out.

Cathy Jamieson: Will the hon. Gentleman give way?

Andrew Tyrie: I will give way again, but I do want to get on to the amendments.

Cathy Jamieson: I thank the hon. Gentleman for his generosity. The question of whistleblowers was raised in a Labour amendment in Committee. Does the hon. Gentleman think that the Government must return to it in the future?

Andrew Tyrie: I think that, in the first instance, it is the job of regulators to advise us—we shall see whether they do—and that it is the job of Parliament to keep an eye on the position. The Treasury Committee will need to be vigilant.
	We failed to secure the abolition of the strategic objective of the FCA, although we see no logical reason why it should remain. It seems to serve as a licence to allow the FCA to do whatever it wants, and to override its own operational objectives. We also failed to secure a statutory duty for the Governor to raise the issue of excessive lobbying by banks. It is regrettable that there is to be no statutory duty to require the production of a second set of accounts designed to identify systemic risks in the balance sheets of banks, and we will ask regulators to return to that issue.
	Nevertheless, if everything is taken into account, it is clear that the commissioners in the House of Lords won the argument, and secured the lion’s share of the measures proposed by the commission. Although the group has been depleted by the loss of Baroness Kramer to the Government, the remaining four have worked assiduously and very persuasively to improve the Bill, and, on behalf of the commissioners in the House of Commons, I thank them heartily. Let me also record my appreciation of the constructive way in which Treasury Ministers have engaged with me, and with other commissioners, on these subjects in recent weeks. They have been extremely helpful, as have their officials, and that has enabled us
	to make rapid progress. What is more, and equally important, the Government have made clear their support for a number of measures—some of which I have mentioned—that it will be the duty of regulators to implement. As I have said, the work of the regulators, and the supervision of it, will be at least as important as the statute itself
	That brings me to the statute itself, and to the amendments that are before us. The first major change that is proposed is the introduction of a senior managers regime. One of the commission’s central objectives was to make a reality of individual responsibility, particularly at senior levels. I lost count of the number of witnesses from failed institutions who were not prepared to take personal responsibility for what was going on in their firms. In principle this should have been the task of the approved persons regime, but it was a disaster. It failed both at ensuring that competent people were appointed and at checking up on their subsequent performance.
	The commission concluded that the APR was a complex and confused mess that did not perform any of its supposed roles adequately. It had become little more than a bureaucratic, box-ticking exercise. Its unsuitability has been illustrated by the fact that it seemed to pass the recently departed chairman of the Co-op bank as fit and proper to run a bank. Another indication of its irrelevance was the fact that most of those responsible for steering our major banks on to the rocks over the past five years were not even reassessed for their suitability after those banks had failed. The APR gave us the worst of all worlds: the appearance of regulatory oversight and the reality of none.
	An essential task, therefore, has to be the abolition of the APR. To replace it, we recommended a much more judgment-based and proactive supervisory approach for the most senior people in banks, a much smaller group than under the APR regime. Specific responsibilities should be allocated to named individuals at the very top of firms. Secondly, for the much wider group of all those whose behaviour could seriously harm a bank, its reputation or its customers, we proposed a licensing system that in the legislation is now called certification. I shall return to that.
	On the senior persons regime, both the Government and the regulators accepted our proposals for the most part, but for reasons beyond everybody they have not accepted the name. Instead they have replaced the phrase “senior persons” with “senior managers”. I think that is guaranteed to confuse because some at the top of banks who clearly should qualify for supervision of this type will not be managing anybody. A non-executive chairman of a large bank does not have a management responsibility. For much of his time at Barclays, Bob Diamond did not have a direct management responsibility. This scheme should, therefore, have been called the senior persons regime. I have not heard any reason why it cannot be called that. That is a relatively minor nomenclature quibble, however, and we are otherwise delighted that the Government have accepted our proposals.
	On certification or licensing, the picture has been somewhat different. Although the Government response to the commission initially promised to implement our
	recommendations on licensing, there was no sign of it in the Bill until Third Reading in the Lords. I am glad to say that that has now been put right.
	The purpose of licensing, or certification, is to ensure that banks themselves have identified those employees—whether traders, senior salespersons, financial managers or whatever— who can do serious harm to the bank or to markets. One of the shocking discoveries of this crisis—including the LIBOR scandal—has been that in many cases the banks did not know who these people were. They certainly should. For them not to do so should constitute a regulatory breach. It should also be a breach to add staff to the certification regime who do not satisfy the harm test—to add staff who cannot do serious harm to an institution. That would defeat the purpose of certification.
	It should be the responsibility of banks, using methods that best fit their organisation, to maintain a certification system, and it should be the responsibility of regulators—using periodic checks—to ensure that they do. Just to be clear, it should certainly not be the job of the regulators to try to identify all these staff themselves. That would guarantee the return of the very bureaucratic box-ticking that we want to leave behind with the abolition of the APR. Those in such jobs should know that their bank may withdraw their certificate, and therefore possibly their ability to earn a living performing that function, and inform the regulator, who may in turn inform other regulators in other jurisdictions, should there be misconduct. It can be a great opportunity for many young staff to sit in front of a computer screen and trade LIBOR and earn a considerable amount of money, but that opportunity should also carry with it responsibility. In many cases that sense of responsibility was found to be wholly lacking.

Ian Swales: As I expected, the hon. Gentleman is making an incredibly thoughtful and powerful speech. We have used the expression “culture change” a few times in the debate today and he talked a few minutes ago about failures causing serious harm to an organisation. Does he believe the banks now pay due regard to reputational harm as well as purely financial harm?

Andrew Tyrie: I think the banks have discovered that the scale of the damage done by the revelations and the scale of the fines that are now being imposed are systemic in implication for their institutions and that has shaken them up a lot. But I do think the culture at the top of our banks is changing. The task of our legislation is to entrench that change for a generation. We have had this crisis. The horse has bolted. What we have got to do now is devise a stable door that can keep the next horse in.

Emily Thornberry: Will the hon. Gentleman give way?

Andrew Tyrie: I will this one last time, but I get a sense that Members might want me to draw to a close in a minute.

Emily Thornberry: The hon. Gentleman mentions LIBOR. In respect in particular of fraud, does he agree that if an individual working within an institution is behaving dishonestly for the benefit of that institution, the institution itself should be liable? If the law were to be changed to allow that, there really would be institutional change.

Andrew Tyrie: The fact that an individual is found responsible should not in any way exculpate the institution from its own responsibilities. On the other hand, a key recommendation of the Banking Commission was to restore individual responsibility. To return to a situation where it is primarily the institution that carries the can for what had been a series of individual pieces of bad behaviour would be a profound mistake. There is a lot behind the exchange we have just had that I am not going to go into now, but which we thought about quite deeply on the commission. I shall now move on as there are a few more remarks I want to make about this group of amendments.
	Everyone now seems to be agreed that the APR adds little or nothing, yet over the past few weeks we have discovered that the discredited APR will survive in legislation. In doing that, the regulators are perpetuating a myth that the APR affords any real protection. It will continue to apply to several groups. First, about 20,000 people in the financial services industry outside banking will still be covered, mainly in fund management and insurance.
	This is unfinished business. The Banking Commission had the remit to look only at banking. It would be absurd to retain a system for one part of financial services that has so clearly failed in another. The Government and Parliament both need to encourage the regulator to look at this and do what is necessary to extend the coverage of the new regime and to remove the APR from other parts of financial services. To rely on the APR is asking for trouble.
	It is also regrettable that the APR will remain in a few isolated pockets within the banking industry. This is because the APR will continue to apply to firms’ LIBOR submitters and to persons with anti-money laundering responsibilities in banks. This amounts, I gather, to only a few dozen people, but I think it would be far better if we removed what amounts to “triple running”. We will have three layers: the senior persons regime, now called the senior managers regime, licensing, now called certification, and the APR in the case of these people. The extra APR layer confers no extra protection, but adds bureaucracy and creates a business cost. There will be plenty of scope for legal wrangling in the event of a regulatory failure, given the great scope for confusion, and for an equal measure of recrimination by regulators who will say they were asked to do too much by Parliament. Banks will have a point when they complain about that. For all those reasons, I hope that the Government will come back to this issue and remove the APR from banking entirely in due course.
	The Banking Commission’s proposals do not guarantee better standards. Much will depend on the judgment of regulators and the common sense of the banks, but identifying responsibility for key roles offers a much better prospect of higher standards than does retaining the APR. The commissioners are delighted that our proposals on this are now going to be put on the statute book.

Mr Speaker: The hon. Gentleman’s speech is characterised, as always, by a combination of scholarship and erudition. May I just inquire whether we are now nearer to the end of his speech than to the beginning?

Andrew Tyrie: I can give you a firm assurance, Mr Speaker, that I am coming very close to the end of my remarks.
	Indeed, I am no closer than I would have been before that intervention, unless I had been told to sit down, because I really am almost at the end.
	I just want to say a word about the Opposition amendment before I sit down. It draws on a number of the Banking Commission’s proposals and, by seeking to put it on the face of the Bill, the Opposition have contributed something by forcing the Government to think again about their rejection of our proposals on licensing. The amendment was therefore probably worth while. However, the Government have now thought again and are implementing our proposals.
	There are two aspects of Lords amendment 41 that would make me cautious about supporting it. The first is it would require regulators to pre-approve all people covered by licensing—or what is now going to be called certification. I fear that would risk recreating many of the problems we had with the APR—the box-ticking bureaucratic culture that we are trying to get rid of.
	My other concern with the amendment is that it appears to mix up licensing with the professionalisation of the banking industry. It would be imprudent to link professionalisation to licensing too closely. Licensing needs to happen now. Professionalisation is not a substitute for it. Even if banking is something that could acquire the characteristics of a profession—which many people are not yet convinced of—it would, as the commission reported, take a generation to build that sense of a professional standard.
	For those reasons, although I strongly sympathise with the intent of the Opposition amendment, it is not a Banking Commission proposal and I shall not be supporting it. The House could do better by implementing the commission’s proposals, which are now embodied in Government amendments.

Several hon. Members: rose—

Mr Speaker: Order. I should explain to the House that I have exercised some latitude so that the hon. Member for Chichester (Mr Tyrie) could offer a bit of background on the parliamentary investigation. I did that because I thought that it would be genuinely helpful to the House and because there would be no other opportunity for those observations to be made. That said, I would not want it to be thought that that will be the normal rubric on these occasions. The normal rule of thumb, which must continue to apply, is that Members should attend to and focus their remarks exclusively on the amendments and should not engage in what might be called a wider dilation. I hope that that is helpful to the House.

Yasmin Qureshi: I will bear in mind your observations, Mr Speaker, but I hope you will indulge me if I occasionally say something a bit different. I will of course spend most of my time on the amendment.
	I want to set the matter in context. I volunteered to serve on the Bill Committee. I am told that it is traditional to have to be nudged into serving on Committees for Finance Bills, unless of course they are Ministers or shadow Ministers. I wanted to serve on the Committee perhaps because I am a bit geeky or because I am interested in esoteric things; perhaps it is because of my legal background that I am interested in these matters.
	I also had a more serious reason for volunteering. We need to bear in mind that this country’s economy relies heavily on the financial services industry, and that a massive banking and financial crisis occurred in 2008, not only in the UK but in similar economies around the world. We know that the crisis started as a result of the collapse of Lehman Brothers and of the sub-prime mortgage market in the United States, which led to the collapse of many banks around the world. Economies like ours—in the USA, Japan, France and Germany, for example—suffered as well.
	It is important to consider these matters in that context, because they inevitably get caught up in the political debate. This Government have often stated that the financial crisis was caused by the Labour party. Indeed, the Minister said earlier that one of the reasons for the crisis was that the Labour Government had not put in place enough rules and regulations. I think it might be helpful if I remind him what his current boss and the Prime Minister have said about those rules and regulations in the past. I refer him to Hansard of 27 November 2006, when the right hon. Member for Tatton (Mr Osborne) said of the then Chancellor:
	“In an age of greater choice, he offers more overbearing control; in an age of greater freedom, he gives us more interference…in an age of flexibility”.—[Official Report, 27 November 2006; Vol. 453, c. 835.]
	The right hon. Gentleman also said in 2006:
	“I fear that much of this regulation has been burdensome, complex and makes cross-border market penetration more difficult.”
	The right hon. Member for Witney (Mr Cameron) said in 2008:
	“As a free-marketeer by conviction, it will not surprise you to hear me say that a significant part of Labour’s economic failure has been the excessive bureaucratic interventionism of the past decade…too much regulation…to little understanding of what our businesses need”.
	The Minister and other members of his Government often say that it was a lack of regulation by the Labour Government that caused the mess, but they need to realise that the Labour Government were trying to regulate at that time and that the then Opposition, who should have been supporting them, were carping from the sides and saying, “No, don’t do this.” A little trip down memory lane might be helpful for everyone concerned.
	I chose to serve on the Committee, and I have chosen to contribute to the debate today because the financial collapse, the LIBOR scandal and other events have shown that the financial sector—an important part of our economy—has not got things right over the years. I will not go into the details of every aspect of the Bill, but my party has been pressing for various changes. The amendment that we won in the House of Lords covers the regulation of people employed in the financial services sector, and I would argue that there is a need for licensing. I am proud of the fact that those on my Front Bench are insisting that the amendment should be accepted and I ask the Government to reconsider their view.
	I am a barrister, and I am subject to regulation. I have to have a licence to practise law, as do solicitors. Members of other professions also require a licence to practise,
	including doctors, dentists and chartered accountants. They are all regulated by independent bodies that oversee cases of misdemeanour or negligence. Why should bankers not be subject to the same rules and regulations? After all, stockbrokers and people who work in commodities and bonds are experts in their field; they are not just pulled in off the street and told to start commodity trading, banking or whatever. They have had professional training and learned their trade.
	The Financial Conduct Authority covers every aspect of the financial services sector, so what is wrong with asking for a licensing system? What is wrong with asking these people to take a professional exam? What is wrong with requesting that they should be regulated properly? If they commit an error—negligence, criminality and so on—why should they not be dealt with appropriately? Why should they not have a licence to practise? We have to re-emphasise how big a part of the United Kingdom’s trading is done by the financial sector. Given that, it is surprising that there has been no regulation of the people carrying out that trading. The Government are missing a big trick if they fail to regulate, because this is important. I do not see why people in this sector should be given a exemption. In all other professional walks of life, people are regulated. We could regulate properly and have it supervised by an independent body.
	It is not enough just for a company to say, “You are fit to work.” That is just not right. We must have an outside, independent body—somebody removed from the institution—to say whether someone is a fit and proper person, and if they do something wrong they should be struck off. What is wrong with that? As a lawyer, I can be struck off if I make a mistake. Doctors, too, can be struck off, so why cannot bankers? Policemen can be struck off, and other people may be told to leave their job or are struck off and prevented from practising their profession, so why not bankers? Labour’s proposal is perfectly sensible and logical; it would be the right amendment to make.
	The hon. Member for Chichester (Mr Tyrie), Chairman of the Treasury Committee, said that this Bill started off 35 pages long and now runs to some 180 pages, after some 192 amendments. That shows that the Government were not thinking things through properly when they were putting the Bill together. One expects some amendments as a Bill passes through both Houses and one expects the number of pages to increase, but the fact that the Bill has increased in size by more than 100 pages shows that it was not thought out properly and things have been happening as we have gone along. Again, that demonstrates that although the Government have done some things, they have failed to address one really important aspect of the whole thing: the regulation of the behaviour of the people involved.
	It was individuals, not machines, making the decisions that caused the whole world to collapse, and the ordinary person in the street in my constituency is suffering as a result of the mess caused by a small group of people. We cannot let that happen again, so it is important that the people making these decisions—the people playing with our money—and the organisations they work for are held accountable and need to explain themselves. Proper training, and a proper certification system and licensing system, are a must for our economy.

Ian Swales: I will keep my remarks relatively brief. Neither of the two major parties has too much to crow about in this area, because the regulatory system is a product of both their Governments over time. However, at least this is one area where the Leader of the Opposition and the shadow Chancellor have said sorry for something they have left behind.
	I am pleased with the work done by the Banking Commission, and I pay tribute to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and my colleague Baroness Kramer for the work they have done on it. I am delighted that the Government have, perhaps kicking and screaming, at last agreed to adopt the vast majority of the proposals. I am particularly delighted that the Bill puts in place powerful measures on ring-fencing, as the Liberal Democrats have been arguing for that for years. Not only was it in our 2010 manifesto, but it was on the front page, so I am pleased to see it happening.
	The background to this is clear: taxpayers should not be held to ransom by these giant organisations, particularly for high-risk activities—casino banking, as it is sometimes called. We must also remember that a lot of these institutions are highly international, so the UK taxpayer is having to stand behind organisations that have a lot of activities overseas—that, too, does not seem right. So it is good that all these measures are being introduced.
	We have seen banks that used to be on the side of customers, both individuals and businesses, increasingly behave very much on the side only of themselves. We have seen scandals involving payment protection insurance, LIBOR, foreign exchange and interest rate swaps, which is the one I particularly wish to highlight. I made a speech on that a few weeks ago in this House. I said that the banks appeared to be moving at a tortoise-like pace when we were not having debates and suddenly acted like hares for a few days when we did have them. I can report that they have become tortoises again since that debate a few weeks ago. Constituents of mine who were expecting repayments in very quick time are still waiting, so I hope the Minister will keep the pressure on, although that is not strictly relevant to today’s debate. We have also seen the Co-op bank scandal and predatory activity by banks in the corporate restructuring area—that is the current scandal and I am sure we have a lot more to hear about it.
	The Government have been acting on matters such as transaction levies, and making sure that fines for institutions leave the industry and do not just go around in a magic circle. The current round of fines is being used to help pay for the military covenant, which has to be a great idea. The Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable) is trying, although it is sometimes a lonely furrow, to do something about high pay: shareholders are being given binding votes on their company’s pay policy; companies are being forced to publish single figures for executive deals; and companies are being encouraged to inject more diversity by hiring non-executives from a broader pool of academics, public servants and lawyers. So, to a limited extent, the Government are trying to do something about that.
	I particularly wish to discuss Lords amendment 41, which deals with professional standards. A joke doing the rounds when the banking crash happened named
	the four chairs of the big banks and asked which of them and Terry Wogan had a banking qualification. Of course, the answer is Terry Wogan and none of the others. That illustrates that for too long we have had under-qualified people in important positions. The hon. Member for Bolton South East (Yasmin Qureshi), who is not in her place, was talking about the legal, medical, pharmaceutical and accountancy professions, which have professional standards of the type she would like to see. However, it is important to note that those standards are not set and regulated in this place; they are set by the professions themselves, which have a huge vested interest in ensuring their own high reputation. Those professions also carry out much more specific and autonomous work in terms of knowing whether an individual has transgressed or not. It is much more difficult in large organisations with long decisions chains to say who is actually responsible for each individual activity. However, I urge the banking profession to think a lot more about how it can enhance its reputation, which, let us face it, is pretty much at rock bottom at the moment. It should think, “How can we have professional standards which are enforced? How can we ensure that people are kept up to date with continuing professional development and that people will be struck off?” However, that is increasingly a role for professional bodies such as the Chartered Banker Institute to be thinking about; it is not something for legislation in this place.
	I welcome the work of the Banking Commission and the Government’s response to it. I welcome the extra powers that regulators are going to have as a result of this legislation, but the onus is on them to use those powers. I would like the Minister to say, at some point during today’s debate, how we are going to scrutinise the regulators to make sure that they use their new powers to their full extent.

Emily Thornberry: It has been said that one of the great innovations of this Bill is the introduction of the offence of reckless banking. It is not beyond our imagination to think that in 2015 the measure will be promoted on many a doorstep by people who perhaps do not fully understand what it is that is being introduced. It is one of those proposed offences that promises a great deal, but delivers very little indeed. There is nothing like it in existence in English law, and I will go on to explain why that is in a moment.
	In the House of Lords, Lord Newby said that
	“we had to put in the Bill a form of words that would create a credible offence that could be successfully prosecuted. The two requirements that an individual’s conduct had to fall far below what could reasonably be expected of them and that they were aware of the risk they were taking”.—[Official Report, House of Lords, 15 October 2013; Vol. 748, c. 427.]
	There are many people, myself included, who believe that this is not a credible offence and that it will not be successfully prosecuted. When passing law in this place, especially potential criminal charges, we should be confident that the offence created has a reasonable chance of being prosecuted. If people are doing wrong in the City of London, we should be passing criminal offences that people are afraid of and that they believe they might be charged with. Passing legislation for the sake of gesture is a slippery slope, and we should be careful about it.

Andrew Tyrie: The question the hon. Lady should ask herself is that if she were a banker, would she be prepared to take the risk?

Emily Thornberry: There are other things that can be done, and I shall briefly touch on some of them. May I begin with the difficulties that exist in relation to this offence? Under the Bill, it would be an offence for a senior manager recklessly to take a decision. I appreciate that some of the additional 175 pages that have been added to the 35-page Bill have been to backfill exactly what a senior manager is and how they will be defined. That is clearly an improvement, and it is unfortunate that it was even suggested that the Bill would be sufficient in its original form. One must remember that even if a definition of senior manager is now one with which we can all be happy, there have been banks that have been brought down by people other than senior managers. Nick Leeson from Barings bank comes to mind, as does the £2 billion that was lost to UBS by Kweku Adoboli.

Mark Garnier: I am fascinated that the hon. Lady chooses to use Nick Leeson as an example, because he went to jail, in Singapore, for four years.

Emily Thornberry: The point is that he was not a senior manager and he brought down a bank. This measure will not solve the problem of banks being brought down. An offence of reckless banking that will apply only to senior managers is not by itself sufficient, which is why I want to go on to say what I think should be done instead.

Andrew Tyrie: I think the hon. Lady is misunderstanding the intentions of each bit of legislative change. The primary purpose of this measure is to change bankers’ behaviour. It is not primarily to protect banks from being brought down. That task lies with ring-fencing and a range of other proposals, particularly with all the structures being constructed around bail-in and resolution. It does not lie with the criminal offence.

Emily Thornberry: With respect, I am even more confused than before. What is the point of bringing in an offence that will change the behaviour of bankers, but will not, by itself, defend the banks? As I understand it, if the behaviour that we seek to stop is reckless banking, the reason that it should be criminalised is in order to stop banks failing and the financial system crashing.
	There are other difficulties with this offence, which include recklessly to take a decision or to fail to prevent the taking of a decision that results in the failure of a bank. That sets a high threshold and, as has already been pointed out, it is not clear who, of those who may have behaved in a reckless way in our banks and who may have brought down the banking system before, would have been prosecuted. The Minister has not been able to assist us as to who might have been prosecuted under the offence. [Interruption.] It is unfortunate that the Minister is distracted at the moment, but the point I am making is important, and I hope that he will be in a position to address it.
	It is difficult to prove that aspect of the offence, and prosecuting it would be a risky undertaking for the prosecuting authorities who will be expected to invest
	public money in prosecuting such matters. There is no point in putting something in legislation that can be discussed on doorsteps but will never be used to prosecute. We have seen the Serious Fraud Office struggle with high-profile, high-risk prosecutions. Too often such prosecutions end in shambles because of the behaviour of the Government, which have cut the SFO’s funding from £53 million in 2008 to £30 million by the end of this Parliament. Differences can be made to the behaviour not only of banks but of businesses generally. May I just add that of course I support Labour’s position on a stringent licensing regime for bankers, the imposition of a fiduciary duty of care on financial-sector staff for clients and customers and its call for a dedicated financial crime unit. In a moment, I will move on to what will work better, but before I do that, I give way.

Guy Opperman: Let me take the hon. Lady back to her last point on prosecutions. I speak as a former prosecutor of serious fraud work, although not for the SFO. Either there is the 51% test of prima facie evidence at the start of the case, or there is not. How the case then ends up, once the matter has been examined by a jury, is a matter for a jury and occasionally a judge. She is being a little harsh on the SFO, which is doing a fantastic job under very difficult circumstances.

Emily Thornberry: I am more than happy to put it on the record that I am a critical friend of the Serious Fraud Office. Sometimes the emphasis is more on the word critical, especially after what we have seen in the newspapers today, with the crash of yet another serious fraud case because the SFO asked an agent, which clearly had a conflict of duty, to do its investigation. That is yet another mistake that the SFO has made. If we want the SFO to turn a corner, we need to do more than show good will. This Bill provided us with an opportunity to change things. It is unfortunate that more attention was not paid to changing corporate liability.
	I listened carefully to what the hon. Member for Chichester (Mr Tyrie) said in his contribution, and I undertake to send him, as a Christmas present, Labour’s policy paper in relation to fraud. If we can change corporate liability to ensure that if an individual within an organisation behaves in a way that is dishonest and to the advantage of the larger organisation, we can prosecute the organisation, unless it can show, in the same way that it can under the Bribery Act 2010, that it has in place controls over its staff, it would have an impact on our banking system. If I may say so respectfully, introducing such legislation will have a greater impact than the measures proposed in this Bill. If we were to introduce a different form of corporate liability, we could increase the fines hugely, and that money could be ploughed back into the Serious Fraud Office. Then we would have an organisation of which people in the City of London would be afraid. They would be prepared in most circumstances to come to an agreement with the SFO to have a deferred prosecution agreement.
	DPAs will not ever exist under the status quo. The DPA legislation has been passed but, as I understand it, no one has come forward to say that their company has been doing wrong, that they want to admit that, that they will pay a fine, that they will change their ways, that they want auditors to come and see how they are
	behaving and that they will point out the individuals who have been behaving in a criminal way. I respectfully submit that that is how to change the culture. That is how we ought to be working and I look forward to discussing it with the hon. Member for Chichester once he has read the Christmas present I intend to send him. If elected in 2015, Labour intends to introduce its own economic crime Act, and I hope that we will take the issues further and develop them. Obviously, I would be interested to hear the hon. Gentleman’s reactions.

Mark Garnier: I intend to talk principally about Lords amendment 41, but before I do so let me echo the comments made by the Chairman of the Parliamentary Commission on Banking Standards, my hon. Friend the Member for Chichester (Mr Tyrie), at the beginning of the debate. He said that he was grateful to the Government for moving such a long way along the road towards the commission’s recommendations. That is a tribute to the organisation that he chaired extraordinarily well for about 18 months and that came up with such sound proposals. It was a great honour for me to be part of that process. It also says a huge amount for the Government that they have taken great heed of what the commission said and have moved a great deal further towards implementing the proposals.
	On Lords amendment 41, I suspect that there is not too much of a difference of opinion in the House about what we are trying to achieve through the Bill—that is, a change in the culture of banks. I take slight issue with the hon. Member for Islington South and Finsbury (Emily Thornberry), because it is not just about preventing banks from collapsing. It is about getting better standards and better service for consumers. Many constituents will complain about their treatment by banks and that has nothing to do with criminal matters; it is simply about the culture and how certain people address other people in their everyday lives. We want to drive that out and to ensure that the banking culture is one of which we can be proud and which consumers can trust enormously.

Andrew Love: Is the hon. Gentleman not disappointed that, since 2007, when there has been such a focus on the problems and difficulties of banking, no greater progress has been made in creating the type of culture we all want to see?

Mark Garnier: I do not necessarily agree. I speak not only as a Member of Parliament, a member of the Parliamentary Commission on Banking Standards and a member of the Treasury Committee but as a former investment banker and investment manager. My hon. Friend the Financial Secretary is also a former banker, so to a certain extent we have a private interest in ensuring that banking standards are greater than they have been. There has, however, been an enormous amount of progress. We have a new regulatory regime, there have been a number of changes in the banks and we have seen a complete change of culture at the top of many of the banks. Things are moving in the right direction but it will take a long time and this Bill is part of that process.
	Although we are all trying to achieve the same thing, the important question is how we will achieve it and who, ultimately, we should ask to ensure that the licensing
	regime is upheld and looked after. The Parliamentary Commission on Banking Standards was perfectly clear that we felt that the approved person regime was complete and utter nonsense. One of the Bank of England’s greatest thinkers, Andy Haldane, highlighted why that was the case: if regulation is devolved to a regulator, all that happens is that the individuals at the head of the banks think that they have nothing to worry about. It becomes the regulator’s problem to worry about such things, and not that of those individuals.
	When we met a number of the banks—particularly UBS, the Union Bank of Switzerland, the senior directors of which appeared in front of us just after it had been fingered for its share in the LIBOR scandal—we discovered that there was an incentive to be ignorant of what was going on within them. The senior managers of UBS who were running the bank when the LIBOR scandal happened within their organisation knew nothing about it until they read about it in the Financial Times three or four weeks before our hearing. That gave rise to the accusation that there was an accountability firewall between the management of the banks and the individuals working on the front line—that is, those at the coal face on the dealing room floors and servicing our consumers.
	We were trying to work out how on earth we could reach a system in which those at the top of the bank took accountability for the work and standards of the individuals in the lower part of the bank. That is crucial in leading me to support the Government in rejecting amendment 41: it does not deal with that accountability but rather gets around the problem. That is why it fails to hit the nail on the head.
	The people running the banks must at some point wake up at 3 o’clock in the morning in a muck sweat worrying that some decision or lack of decision that afternoon or that year will result in a serious problem in the organisation. If they think that the regulator will take responsibility, they will not take that personal interest. That is crucial.
	Over the three years for which I have been a member of the Treasury Committee, and particularly over the past year for which I have been a member of the Parliamentary Commission on Banking Standards, I have had the opportunity to meet a great number of senior bankers. Most have come on to the scene since the crisis and, in some cases, since I have been elected, and I am convinced of the sincerity of their desire to do the right thing in those organisations. They genuinely want change. They see reputational risk as a commodity that affects them and want to do something about it.
	To that end, the banks have got together and employed the wisdom of Sir Richard Lambert, who is looking into setting up a professional standards body for the banks. The banks will run it, pay for it, finance it, ensure that it works and put it in place. We have some good thinkers working on that and it is symptomatic of the fact that the banks want to change their culture.
	An organisation such as HSBC has 270,000 people working for it, so no matter how sincere the integrity of the individual at the top, we must work out a mechanism to drive integrity throughout the system. Personal accountability for the senior management of the banks is crucial in that. I keep coming back to this point: if
	Douglas Flint is waking up at 3 o’clock in the morning worrying that somebody in Kidderminster is getting something wrong, that is a good thing.

Stewart Hosie: The personal responsibility argument is extremely strong and powerful, but does not the hon. Gentleman see some merit in the fact that Lords amendment 41 talks about a code of conduct? Is not the code of conduct described in the amendment a mechanism that could be used to drive the change in culture throughout the organisation that he describes?

Mark Garnier: I agree entirely. A number of professional bodies in the banking industry have a code of conduct. I, for example, am a fellow of the Chartered Institute for Securities and Investment, which has a code of conduct. Many people working in investment banks will be fellows of the CISI. Indeed, Sir Richard Lambert’s proposals, about which we shall hear more in the new year, will include a code of conduct. It is also worth bearing in mind that the banks are producing their own code of conduct that is being fed back to the regulator, which will consider what they are saying.
	Let me wind up, because I think the Minister would like to speak at some point. I would be the last person to stand in his way, because I know that he will have some intelligent things to say. Suffice it to say that I think amendment 41 will prevent the behavioural changes we desire, and that is why I will reject it.

Sajid Javid: I thank the shadow Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for her comments and all other—

Eleanor Laing: Order. With the leave of the House, Minister.

Sajid Javid: Thank you, Madam Deputy Speaker. With the leave of the House, I thank the shadow Minister for her comments and all other Members who contributed to the debate. In particular, I thank my hon. Friend the Member for Chichester (Mr Tyrie) for the work that he has done in this area, especially in chairing the Parliamentary Commission on Banking Standards. I have listened to all hon. Members with great interest over the past couple of hours, but in particular to my hon. Friend. I thank him for all his efforts and also for his supportive comments, which I take as broad support for the Government’s amendments.
	In the time available, I shall deal quickly with some of the key issues that came up. The shadow Minister raised the issue of timing and her understanding that there was not enough time to scrutinise the Bill and the amendments. She will know that the Bill started with the recommendations of the Independent Commission on Banking, which were scrutinised extensively in the House and in the other place, including the recommendations of the PCBS. The Government produced their response as quickly as they reasonably could to the PCBS, which was in July, in advance of the Commons Report stage so that it could inform debate as soon as possible.
	The shadow Minister also asked why the Government resisted Opposition suggestions on improving professional standards. Again, she will know that because the PCBS
	had been set up and had been asked specifically to look into this area, the right thing to do was to listen to the commission and take its views into account when drafting amendments, before anything was settled upon. She asked about minimum standards and competence. She is right to do so, as we all recognise the importance of those. It is worth pointing out that, because of Government amendments that were introduced, banks will be required to check all new applicants to ensure that they are fit and proper, and not just at the point that they start with the bank; annual checks will have to take place and regulators will have important powers to specify any qualifications that they believe are required for the job.
	A number of hon. Members raised the issue of a code of conduct. The regulators, both the Financial Conduct Authority and the Prudential Regulation Authority, will have broad powers, including the ability to set up a code of conduct for banks in general or for a particular bank, as they see fit. These are the kind of powers that regulators can use in future. My hon. Friend the Member for Redcar (Ian Swales) asked how we could scrutinise regulators. He is not in his place, but he will know that an annual report produced by the regulators about how they discharge their functions will be provided to Parliament, where it can be given proper scrutiny.
	There was a discussion about remuneration. Hon. Members will know that the PCBS made recommendations on remuneration which the Government have accepted, particularly on longer deferrals and clawbacks, including a full clawback if a bank ends up receiving state aid. I understand that the PRA will make further recommendations on that next year.
	I have time only to touch on Lords amendment 41 which, as I said, the Government oppose. It is worth taking into account the comments of my hon. Friends the Members for Chichester and for Wyre Forest (Mark Garnier) that, although the amendment is well intended, it will lead us back to a box-ticking culture and confuse regulation and professional standards. Both are necessary, but it would be wrong to conflate these—
	Two hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 41.
	The House divided:
	Ayes 299, Noes 222.

Question accordingly agreed to.
	Lords amendment 41 disagreed to.
	After Clause 12

regulation of payment systems

Sajid Javid: I beg to move, That this House agrees with Lords amendment 63.

Eleanor Laing: With this it will be convenient to discuss the following:
	Lords amendments 64 to 154.
	Lords amendment 155, and amendments (a) and (b) thereto.
	Lords amendments 156, 161 to 163, 169 to 172, 175 to 180 and 182 to 184.

Sajid Javid: The second group of amendments introduce substantial changes that will ensure that consumers get a fair deal. They will drive up competition and improve outcomes for consumers. Amendments 63 to 134 introduce a new competition-focused, utility-style regulator as a separate legal entity established under the FCA.
	The Government have concerns about the payment systems market, with particular problems in three main areas: competition, innovation and responsiveness to consumer needs. Under the current arrangements, there
	is nothing holding big banks, payment scheme companies and infrastructure providers to account for consumers. The regulator will therefore have strong powers and objectives: to ensure that the operation of payment systems promotes fair and open competition in banking; to promote innovation in payment systems, for the benefit of consumers; and to support the interests of end users.
	The regulator will have bespoke objectives and powers to address problems particular to the market for payment systems, allowing for the benefits of close co-ordination with the FCA. Once a payment system is brought into scope, the regulator will have powers over the system’s operators, infrastructure providers and providers of payment services using the system.
	The payment system regulator will be equipped with a broad range of regulatory powers, enabling it to address the significant issues causing problems in the market for payment systems. To open up access and encourage greater competition, the regulator will be able to intervene and require changes to any anti-competitive fees or terms and conditions of an agreement for access to regulated systems. It will have powers to require the provision of access to payment systems. The regulator will also have competition powers exercisable concurrently with the Competition and Markets Authority.
	My hon. Friend the Member for South Northamptonshire (Andrea Leadsom), who is in her place, will be pleased to know that the regulator will examine the case for full account number portability within 12 months of its establishment—although, with the successful seven-day switching service, which was launched by banks in September, hon. Members should know that they do not have to wait until then if they want to switch their account quickly.

Ian Swales: With regard to account number portability, is the Minister concerned that in the period between now and spring 2015, when the regulator will come into force, work might slow down, rather than speed up, because of the unpredictability of the regulator?

Sajid Javid: I have listened to my hon. Friend carefully, and others have made that point previously, but I do not share those concerns. I think that the regulator will move on that swiftly. The changes that have so far been made to payments, such as the switching service, are already making a real difference.
	Ultimately, if the payments system regulator determines that the current ownership structures need to be broken up to achieve adequate competition, it will have the power to require disposals of interests in operators of the regulated systems. It will also have the power to enforce Competition Act 1998 prohibitions against anti-competitive agreements and abuse of dominance and to make market investigation references to the Competition and Markets Authority.
	The amendments create a competition-focused regulator in this key market.

David Mowat: I very much welcome the role that the payments regulator will have. For the avoidance of doubt, though, can the Minister confirm that part of its scope will be credit interchange fees and that it will have a role in potentially regulating their level over time?

Sajid Javid: Yes, I can confirm that. Although it remains for the regulator, once set up, to deem the regulated systems, we envisage that that will be part of its scope. My hon. Friend will know that the issue is being considered right now through a proposed European Union initiative. We would expect the regulator to take that into account as well.

Cathy Jamieson: What analysis have the Government undertaken of the impact of designating card payment systems for regulation? If the system will not come in until spring 2015, is there not a genuine danger of blight in terms of planning the way forward?

Sajid Javid: Before we made the final decision to create the regulator, a full consultation was carried out. We received input into that consultation from many stakeholders, and that formed part of the analysis of how the regulator could carry out its function, as well as the importance of having such a regulator. We expect not only that the regulator will be fully up and running in around 2015, but that once the Bill receives Royal Assent the FCA will begin the process of setting it up early next year. The FCA has resources that can be called on, and it has already started working on exactly how the regulator would operate, so I think that it will be able to start at least some of its work sooner than 2015.
	Amendments 135 to 152 establish a special administration regime to be known as the financial market infrastructure, or FMI, administration. Inter-bank payment and settlement systems are integral to the efficient operation of the financial system, processing transactions worth hundreds of billions of pounds a day. Currently, if such a system becomes insolvent, it will typically enter the normal administration procedure and the administrator will be under a duty to look after the interests of the company’s creditors without regard to the implications for the wider UK economy. In those circumstances, the continued operation of crucial payment and settlement services could be threatened, which could have a significant adverse impact on the market and the wider economy. The amendments will ensure the continuity of crucial service provision of recognised inter-bank payment systems and security settlement systems in a time of crisis by imposing a duty on an FMI administrator to maintain the company’s crucial services during administration.
	The key features of FMI administration are: the FMI administrator is placed under a duty to maintain the company’s crucial services during the period of FMI administration; the Bank of England is given the ability to apply to the court to place a relevant company into FMI administration and has conferred on it a power of direction over the FMI administrator; powers are granted allowing for the property, rights and liabilities of the relevant company to be transferred; and restrictions are established on early termination of contracts for the supply of certain goods and services to a company that has entered FMI administration.
	I now turn to payday lending—a subject about which many Members in all parts of the House rightly feel very strongly. The Government are deeply concerned about consumer detriment in the payday market and committed to taking action to protect borrowers from
	the harm that these lenders can cause. I know that this concern and commitment to act is shared and supported by Members in all parts of the House. This Government have already taken decisive action to overhaul regulation on the payday lending sector, with the Financial Conduct Authority taking on its broad new powers in relation to consumer credit from April next year.
	However, the Government will do more. We want to put an end to the unfair costs of borrowing from payday lenders and to prevent the spiralling costs faced by those struggling to repay.

Yasmin Qureshi: We welcome the change, but it will not start until January 2015. Our amendment (a) says that it should start from October 2014, because people spend the most, and often build up the most debt, in the period up until Christmas. Therefore, what is the harm in bringing the date forward by three months?

Sajid Javid: If the hon. Lady will allow me, I will answer her questions when I consider the amendment she mentions.
	There is a growing evidence base, including lessons from other countries, that a cap on costs is the right way forward for consumers. That is why the Government tabled an amendment in the other place to require the FCA to impose a cap on the cost of high-cost credit and short-term loans—not just an interest rate cap but a cap on all fees and charges, including default charges and roll-overs.

Bob Stewart: Does my hon. Friend have any idea what level of cap there might be on such charges?

Sajid Javid: My hon. Friend asks a reasonable question that I am sure many Members would be concerned about. The cap should be set by the FCA at a level designed to protect consumers. I hope that when I go on to talk about the process, that will give him a bit more definition regarding his concerns.

Graham Stuart: I do not really understand what the Minister says about a cap protecting consumers. Before we had these payday lenders who get so much opprobrium, the alternative was very often door-to-door loan sharks who would break your legs if you did not pay them back. The great feature of the payday lenders is that they do not do that. What assurance can he give that any caps we impose will not force people back into the hands of unscrupulous and illegal lenders instead of the payday lenders, who at least work within the law?

Sajid Javid: My hon. Friend raises a good point. A number of charity groups involved in the debt advisory sector share those concerns. However, most of them agree, especially in the light of emerging evidence from other countries such as Australia and from certain parts of the United States, that it is possible, if researched properly, to set a cap at a level that can protect consumers but at the same time prevent extortionate costs. That will be the job of the FCA when it looks at the matter, and I know that it will take it very seriously.

Pat McFadden: Following on from the previous question, surely the Minister agrees that we can do better than offer people
	a choice between having their legs broken and interest rates of several thousand per cent. Government Ministers accepted that logic in their recent announcement about an interest rate cap. Surely it is possible to bring in a system that gives some measure of protection to the consumer without driving them into the arms of illegal loan sharks.

Sajid Javid: I agree with the right hon. Gentleman that it is certainly possible to have a better system than the current one. There will be a number of changes, including the moves towards a cap and the change of regulator from the Office of Fair Trading to the FCA, which set out in October some of its planned measures with regard to continuous payment authorities, roll-overs, advertising and affordability. Those are all part of a package that will help to protect consumers in the sector.

Edward Leigh: I am sorry to say this to the Minister, but he has not replied to the point made by my hon. Friend the Member for Beverley and Holderness (Mr Stuart). Of course, the Government can do what they like—they can set a cap—but the Minister must respond to the point that the Government cannot legislate against sin. The fact is that people are desperately hard up. If we legislate or put a cap on one thing, the evil moves to another, almost worse practice. The Minister must make some effort, in the real world, to answer my hon. Friend’s point.

Sajid Javid: If my hon. Friend will allow me, I will, as I move on, provide more information on that particular point.

Andrew Love: I thank the Minister for giving way so liberally on this issue. He mentioned the FCA’s role not just in setting the cap, but in other critical arrangements, such as roll-over, continuous payment authorities and proper administration of the high-cost credit sector. Does he think that that goes far enough? If we are going to get this sector right, many organisations think that the consumer needs more protection.

Sajid Javid: The measures that the FCA has already suggested, and on which it is currently consulting, go a long way to protect consumers in this sector. Of course, the FCA has broad powers in this area and there is nothing to prevent it from considering future measures as it learns more about aspects of the market. For example, the hon. Gentleman may know that the Competition Commission is currently looking into this sector. It is due to report back with its preliminary findings next May and a final report around November. It will look at the sector for about 18 months in total. I am sure that the FCA will take that into account and see what further measures it could take, if necessary, with the broad set of powers it already has. I hope that is of some reassurance to the hon. Gentleman.
	Designing the cap on the cost of credit is a job not for the Government but for the independent and expert regulator. Nor is it right that the detail of a cap should be enshrined in primary legislation, given that the industry it is intended to bind is so fast-moving and innovative.
	Lords amendment 155 makes clear the FCA’s overarching objective in this endeavour: it must make rules to impose a cap to protect consumers from excessive charges imposed
	by high-cost, short-term lenders. This language echoes the FCA’s consumer protection objective. The FCA must make rules to advance one or more of its operational objectives, namely consumer protection, market integrity and competition. That applies to the rules to implement the cap, just as it does to all FCA rule-making. The FCA’s competition duty also applies. It must consider how the rules affect the ability of the market to serve consumers’ interests.
	As we have heard, introducing a cap is not without risks or potential adverse consequences, including reducing access to credit for some individuals who find themselves in financial difficulty. The FCA will not be able to eliminate those risks, but it will seek to manage them. It will be important that the FCA strikes the right balance in designing and setting the cap.

Stephen Doughty: Given that the Government have moved belatedly on this issue—I hope it will make a big difference, notwithstanding the risks mentioned—will the Minister pay tribute to organisations such as Sharkstoppers and Movement for Change and the many community activists around the country who have highlighted the dangers posed by the payday loan industry, which is getting people into thousands of pounds’ worth of debt? The Government have listened to those voices, so will the Minister pay tribute to them?

Sajid Javid: I assure the hon. Gentleman that we as a Government have spoken to many stakeholders, including hon. Members, on this issue. Many people have done a good job and deserve credit for looking at the evidence in more detail.

Yasmin Qureshi: rose—

Sajid Javid: I will take this as a final intervention, because I need to plough on in the interests of time.

Yasmin Qureshi: I thank the Minister for giving way; it will not take long. Following the point made by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), will the Minister also congratulate my hon. Friend the Member for Walthamstow (Stella Creasy), who has played a great part in raising and campaigning on the issue?

Sajid Javid: I will. The hon. Member for Walthamstow, my hon. Friend the Member for Worcester (Mr Walker) and many other Members have shown great concern in this area and have made a welcome contribution to the debate.

Nigel Mills: Will the Minister give way?

Sajid Javid: I will give way for the last time.

Nigel Mills: I am grateful to the Minister for giving way one very last time. I am not sure that I agree with him that it is not for Parliament to decide roughly where the cap should sit, because if we set it too high it will be meaningless and if we set it too low we will drive too many people out of the loan market. What will the Minister do if the FCA pitches the cap in a different place from where the Government think it ought to be? Would he want to come back to Parliament to take another look at the situation?

Sajid Javid: I thank my hon. Friend for his intervention. I think that the FCA, acting independently and looking at the evidence, is the right organisation to set the cap. I do not think that politicians setting the cap would be as productive; actually, it could be counter-productive.
	I now turn to the cost-benefit analysis that the FCA will have to conduct, which I think will help reassure Members that it will approach the task in the proper way. The amendment specifically requires that the FCA must consult the Treasury before it publishes and consults on any draft rules. To reflect the importance of keeping the rules current and effective, the FCA must report, each year in its annual report, on any rules it makes under its capping powers.
	Finally, it is worth spending a moment on the issue of defining payday lending in primary legislation. Putting a narrow definition in primary legislation could lead to unintended consequences. Lenders may just try to circumvent the definition. The amendment therefore allows the FCA to specify precisely which types of high-cost, short-term loans are captured when it makes its rules to effect the cap.
	Amendment (a) to Lords amendment 155, which was tabled by the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), relates to data sharing. I am grateful to her for raising that important issue and the Government fully agree that urgent action is necessary to tackle it. The whole system needs to improve to support responsible lending. Lenders must make proper assessments of an individual’s ability to repay before they lend, based on accurate, timely and comprehensive information on their outstanding loans.
	The FCA plans to put strict requirements on firms to undertake affordability assessments to ensure that a borrower can afford to make sustainable repayments. The FCA is not stopping there. It has warned the industry that it must improve the way in which data sharing works, including how quickly lending data are made available. The chief executive of the FCA, Martin Wheatley, has made a commitment to me today in writing that if the industry fails to improve, the regulator
	“will not hesitate to act”.
	The Government wholeheartedly endorse the message to the industry that the FCA will act if it does not respond quickly enough. This matter is a priority for the FCA. It is committed to improving the way in which data are shared and lending decisions made.
	I therefore believe that amendment (a), although well intended, is not necessary. I hope that on the basis of those reassurances, the hon. Member for Kilmarnock and Loudoun will not feel the need to press it.
	The hon. Lady also tabled amendment (b) to Lords amendment 155, which relates to the timetable. The Government want the cap to be in place as soon as possible. That is why we are taking this opportunity to introduce legislation that requires the FCA to impose a cap on costs. The FCA will then be able to get on with implementation without delay. Let us be clear that the Lords amendment provides a statutory backstop date for implementation. The cap must be in place by 2 January 2015. If the FCA can deliver it sooner, it will. However, it must not rush and risk getting the wrong result for consumers.
	I will share with the House what Martin Wheatley told me today. I understand that he has published the letter on the FCA website. He wrote that
	“it is very important that we are clear with you on the practical implications of any further shortening in the timetable, the principal one being that we believe it is impossible to have as strong a cap based on a shorter deadline. This cannot be the intended outcome from a consumer protection standpoint”.
	I believe that the hon. Member for Kilmarnock and Loudoun has received a copy of that letter. I received it only just before I stood up to speak at the Dispatch Box.
	I hope that Members from all parts of the House agree that a compromised outcome for consumers would not be the right result. The FCA’s current timetable for implementing the cap is ambitious, but deliverable. Crucially, it enables the FCA to draw on the findings of the Competition Commission’s current investigation of the market, which I referred to earlier. It is vital that the FCA can benefit from the Competition Commission’s insight into the market when designing the cap.
	The FCA is already getting on with gathering the evidence and detailed analysis that it needs. It will consult in the spring on its draft proposals, at around the same time as the Competition Commission is due to publish its provisional findings. Consultation will take place over the summer and the FCA plans to make the rules in the autumn of next year. Again, that is likely to be at about the same time as the Competition Commission issues its final report. The cap will come into effect, at the latest, by the beginning of January 2015.

Stephen Doughty: Notwithstanding the points that the Minister is making, many consumers and campaigners on this issue will be concerned about what he has said about the time scale. The Government have dragged their heels on this issue for a number of years and could have taken action well before the date that has been set. I would like to see a cap before this Christmas. I agree with other hon. Members that it is crucial that the cap is in place before next Christmas. One of the campaigners from Swansea whom I met, a woman called Serai, got into more than £1,000-worth of debt with one of these lenders after taking out a very small loan to help pay for her kids’ Christmas presents. This is a crucial point, so I hope that the Minister will give a little more hope to the many campaigners who would like to see the cap introduced before next Christmas.

Sajid Javid: I will say a little more about the timetable in a moment, but it is a bit unfair of the hon. Gentleman to say that the Government have had years to introduce the cap, when the Government whom he supported had 13 years to introduce a cap and did nothing.
	A number of steps must be taken before the cap can be implemented. All of those steps are important and if they are rushed, it will put consumer protection at risk for the sake of speed. There must first be evidence gathering and analysis. That is critical in getting the cap right. The FCA will draw on the evidence that the Competition Commission has collected. It might also have to get information from lenders and others in the market to get on with its work as quickly as possible. Yesterday, the Government laid secondary legislation before Parliament that will allow the FCA to seek
	information from the industry. That will support the design of the cap and the cost-benefit analysis that the FCA must issue.
	The second and most vital part of the process is the consultation with interested parties on the proposals and their impact, as set out in the cost-benefit analysis. The final component that is necessary for the successful implementation of the cap is that lenders must be given a short period in which to update their systems and processes to meet the new requirements and become responsible, compliant lenders. Difficult though that is, we are not prepared to compromise on the process because that could lead to poor outcomes for consumers.

John Woodcock: rose—

Sajid Javid: I need to plough on; I am sorry.
	I thank the hon. Member for Kilmarnock and Loudoun for giving me the opportunity to set out the FCA’s plans for implementation. I hope that has provided reassurance that the FCA is committed to taking action as soon as possible, and that she will feel able to withdraw her amendment.
	In summary, the Government believe that a cap on the cost of payday loans is necessary better to protect consumers from excessive spiralling costs, working alongside regulatory interventions that the FCA is already proposing to clamp down on the causes of consumer harm in the payday lending market.
	Amendments 162 and 163 will provide significant benefit to consumers and financial services businesses that have been affected by poor practice in the claims management industry. Claims management companies have a legitimate role in helping consumers claim compensation, but a minority have acted irresponsibly. Despite the threat of suspension or cancellation of authorisation, some CMCs act speculatively and submit illegitimate claims that clog up the system and ultimately impose costs and delays on consumers. The amendments will give the claims management regulator power to impose financial penalties on CMCs that are guilty of misconduct.
	The Government’s amendments provide a new form of redress—including financial compensation for consumers affected by a poor service from CMCs—by introducing a mechanism for the cost of handling complaints to be recouped from the industry. Together, the amendments will help ensure that the claims management industry acts more responsibly, and where it does not the regulator and Office for Legal Complaints can take action.
	The Government agree with Lords amendments 153 and 154 that provide the PRA with a secondary competition objective and the FCA with competition powers that are exercisable concurrently with the Competition and Markets Authority. The Government are committed to improving competition in our banking sector to drive up consumer outcomes. A secondary competition objective for the PRA was recommended by the PCBS, and the Government accepted it. That objective will ensure that the PRA remains above all the watchdog for financial stability, but we will require it to play a more proactive role on competition.

Nigel Mills: If the Minister had had the pleasure of sitting on the Bill Committee, he would know that I tabled an amendment to suggest we cap the market
	share that banks could have in certain markets. What will he do if, perhaps by 2020, we have not seen a great increase in competition and still have too few banks with too high a market share? Does he think further action by Parliament would be needed?

Sajid Javid: My hon. Friend will know that the Government have introduced many initiatives to increase competition in the banking sector. Just today we heard that Tesco Bank will enter the current account market next year, creating hundreds of jobs in Scotland. That is welcome news, and other innovations such as current account switching also help to engender more competition. I do not think any of us know what the situation might look like in the future, but I am sure a future Government will take that into account in 2020, and beyond, and see whether any further measures are required.

Andrew Tyrie: The Treasury Committee and the Banking Commission are extremely grateful that the lion’s share of the proposals on competition have been implemented. We think that will be a step forward, and the Treasury Committee has been pretty active in that field for more than three years. As I alluded to earlier, one recommendation has not been acted on by the Government, and I would be grateful if the Minister explained why. Perhaps it can be best summarised in this way: what additional benefit is conferred by the FCA’s strategic objective that is not provided for through the operational objectives of the FCA?

Sajid Javid: My hon. Friend will know that the FCA currently has an objective to promote competition, and I know that he supports that. The Government have accepted the recommendation from the commission to give this secondary objective to the PRA, so those two objectives for the key regulators—the FCA and the PRA—will make a difference. If my hon. Friend has some further suggestions for the future, I will certainly take a closer look at them.
	The FCA’s consumer panel, which represents the interests of consumers, is well placed to communicate its views to the PRA, and in the other place the Opposition have called for a role for the FCA’s consumer panel. Following constructive debates in the other place, I am pleased that the Government have been able to include amendment 156, which delivers the Government’s commitment to ensure that the FCA’s consumer panel can provide its views to the PRA effectively. This was warmly welcomed on both sides in the other place and by the chair of the consumer panel.
	The amendments will simplify day-to-day operations for building societies, other banks and all the other entities that I have mentioned. They will enable banks and other institutions to compete on a more level playing field and improve things as suggested in the Bill and by the commission and others. I commend them to the House.

Cathy Jamieson: I will develop my arguments in a moment, but I give notice that at the appropriate stage we will seek to divide the House on both of the amendments that we have tabled in this group.
	I shall start with the payments system regulator, because I was somewhat surprised by the number of representations on the Bill from the industry, even at
	this late stage, including on the payments system regulator. The Minister has responded to interventions on that point, but I hope that, when he has the opportunity to respond later, he will address some of the questions raised by the industry, such as the concerns expressed by VocaLink. Although it has said that it is broadly supportive of the regulator and welcomes the change in the Government’s position, it is none the less very keen to ensure that there is no planning blight—a gap between the point at which the legislation becomes law and the time at which the system would be fully operational.
	We have also had representations from other sectors of the industry, including Visa and MasterCard, on the need for a level playing field and ensuring appropriate and clear definitions of which payment systems come under the regulator, taking into account the broad range of players that facilitate payments for consumers and businesses. Further representations have been made about the need to look in detail at the whole system and the challenges of establishing the PSR, creating the right skill set and ensuring that it operates correctly. The work load of the regulator will also need to be taken into account as part of its remit.
	The Minister said that he believed that the FCA had the resources to ensure that the system will be set up on time and will make progress as planned. I contrast that to the approach on payday lending, and I shall move on now to considering that issue.
	At the outset, I must say that we welcome the Government’s U-turn on the issue of capping the costs of the controversial payday loans. [Interruption.] I hear the hon. Member for Braintree (Mr Newmark) saying that that was not a U-turn. I gently remind him that the Government have repeatedly refused demands to deal with legal loan sharks. They now appear to have been dragged, kicking and screaming to their current position as a result of pressure from Labour and countless other campaigners, including many of my hon. Friends in the Chamber today who will no doubt wish to speak.

Brooks Newmark: rose—

Cathy Jamieson: Let us remember that, during the passage of the first Financial Services Bill, Labour tabled amendments to give powers to the FCA to cap the cost of credit. Perhaps the hon. Gentleman will explain why the Government opposed them.

Brooks Newmark: I am sure we all agree that the abuse of payday lending is a scourge, and has been a scourge for many years, on our constituents’ lives. The hon. Lady seems to have a form of selective amnesia. Perhaps she can explain to the House why, during 13 years in power, Labour did absolutely nothing to deal with this pernicious form of payday lending.

Cathy Jamieson: I had hoped that the hon. Gentleman would explain why the Government opposed Labour’s amendments. I will come on to talk about the explosion of the payday sector, particularly in the past couple of years on this Government’s watch. [Interruption.] It is no good the hon. Gentleman shaking his head and saying, “Oh come on.” We have the opportunity now to tighten up legislation. That is what I wish to do.

Stephen Doughty: I apologise for omitting to mention my membership of the national committee of Movement for Change, which has been campaigning on this issue, Madam Deputy Speaker.
	Does my hon. Friend share my surprise at the continual chuntering from the Government Benches? As she rightly says, there has been an explosion in the past few years on this Government’s watch, and they have been dragged, kicking and screaming to this point. I have seen an explosion of these stores on high streets across Cardiff, and an explosion in cases of people who have got into trouble with payday lenders.

Cathy Jamieson: My hon. Friend makes valuable points, which I will come on to address.
	The Government opposed the proposals initially, but eventually gave in and passed their own amendments in the other place. The FCA has so far failed to use its powers to introduce a cap. There were concerns that unless pressure was applied it would not necessarily have been able to speed up new powers, and we could have seen a further delay in real-time monitoring across the high-cost loan sector. That is why, some months ago, the Leader of the Opposition promised to introduce a cap. He also suggested an extension to a levy on payday lenders’ profits, which would be used to double the level of Government funding for alternative low-cost providers, such as credit unions, for those struggling with the cost of living crisis.

Sheila Gilmore: I am sure my hon. Friend agrees that, had there been an agreement earlier, some of the people still waiting for protection that will not appear until early 2015 would be protected by now. I share the view of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) that the sector’s visible expansion in recent years is remarkable. In many years of living in my city, I have never before seen such proliferation of this kind of lending, let alone the advertising on television.

Cathy Jamieson: My hon. Friend makes a valid point. Members in all parties will have seen the sector’s expansion on their high streets. I do not normally refer to the Daily Mail, but it published an article on the increase in payday loan advertising, which is a concern. I am cautious about the process of normalisation, particularly children and young people seeing these businesses on our high streets and in advertising.
	We must remember the extent of the problem of payday lenders charging interest rates of up to 4,000%, for example, on temporary loans taken out by desperate families who often have nowhere else to turn. Someone commented earlier that so-called legal loan sharks did not break the legs of those who borrowed from them like illegal loan sharks perhaps would, but we have to understand that the many desperate families who turn to these services to borrow, sometimes for the basic necessities of life, often end up broken in different ways.
	Up to 5 million families plan to borrow money from payday lenders in the next six months; as we have heard, between 2009 and 2012 the market more than doubled to about £2.2 billion; more than one third of those who take out a payday loan do so to pay household bills, such as gas and electricity; 1.5 million households spend more than 30% of their income on unsecured credit
	repayments; and personal debt is expected to rise to 175% of household income by 2015—that is the concern about what is happening to families in the real world.

Jonathan Edwards: I am sure the shadow Minister watched the recent item on “Newsnight” on this issue with great interest. One of the major issues now is that those who take out these payday loans damage their credit rating and then cannot access mortgages down the line. Is that not an issue we must challenge, if we do not want to store up major troubles?

Cathy Jamieson: That is an important issue that ought to give us more food for thought. In certain circumstances, families might need to borrow on a short-term basis and be perfectly able to pay it back on time without it causing them long-term damage, but they would want to know, before taking out such loan, that it could damage their credit rating.
	I want to return to those who perhaps suffer most from the payday lending sector. Despite changing their tune and bowing to pressure from the Opposition and campaigners at the sharp end, the Government have not gone far enough to protect hard-working families from falling into unmanageable debt. That is why, even at this late stage, we have tabled our amendments. On the first, which relates to data sharing, I am sure the Minister will be aware of the concerns set out by StepChange Debt Charity about how the FCA’s proposed responsible lending rules fail to make payday lenders use real-time credit data in their loan decision making. It says that evidence from its clients suggests that payday lenders often use out-of-date credit data and therefore fail to pick up on whether borrowers have existing payday loans. Understandably, it then makes the point that lenders cannot be sure they are lending responsibly.
	As we have heard repeatedly, multiple payday loans from different lenders are a major cause of debt problems. Two thirds of StepChange clients reporting financial difficulties with payday loans have been granted overlapping payday loans from different lenders. It also argues that the regulator’s responsible lending rules transpose Office of Fair Trading guidance into binding rules but continue to allow payday lenders to make loans without using that up-to-date information about borrowers’ existing financial commitments. That is obviously causing particularly severe problems for those who get into difficulty with multiple payday loans.
	We should listen to what StepChange tells us about the growing problem of people being lent one unaffordable loan after another as they struggle to pay off the loans falling due. It tells us that more than 30,000 people contacted it for help with payday loans in the first six months of 2013—almost double the figure for the previous year. The average amount owed on payday loans by its clients has risen to more than £1,600, creating severe financial difficulties for those clients. In some circumstances, even a whole month’s income would not cover the repayments. It also tells us that a typical client with payday loans now has three payday loan debts and that one in five have five or more with different lenders.
	Therefore, it is clear that different payday lenders granting overlapping loans is a major cause of payday debt dependency and that current procedures are not working. It is thus sensible for the FCA to require payday lenders to make use of up-to-date credit information
	on a borrower’s short-term commitments when they decide whether to issue or extend a loan. Payday lenders have long claimed to be working towards a system of sharing credit data in real time. They have been talking about it for more than two years, but there has been no solution.

John Woodcock: My hon. Friend is making a very good speech. We have heard the Minister say at the Dispatch Box that the Government are now committed to tackling this issue, whether belatedly or not. This is such a good opportunity to show that we can all be as one in the House and to take action where there is still clearly a problem, as she is so amply setting out.

Cathy Jamieson: I thank my hon. Friend for his kind words about my comments. I am simply putting forward the views brought to us by the people at the sharp end who have experienced the worst problems from payday lending. I pay tribute to those people again for doing so. I agree that it would be wonderful if we could secure some further consensus on these problems and send a clear message to the industry, particularly on advertising. The advertising spend of the top five payday lending brands apparently stands at about £36 million a year. That seems to suggest that they are investing heavily in attracting new borrowers at the same time as being not quite as willing to invest in responsible lending.

Stephen Doughty: My hon. Friend has made an important point about the amount of money such companies are investing in advertising. Many Members will have noted how much investment those companies are putting into advertising in football. Fans are targeted, which I think is particularly heinous, and a number of organisations have campaigned against that. Does she agree that football clubs should resist that type of advertising, which will put their supporters into great debt?

Cathy Jamieson: My hon. Friend tempts me to talk about football, which is one of my favourite topics. I will resist that temptation, except to say that I share his concerns about that.
	Returning to our amendments and what the industry could do, I understand that there are differences of opinion about how best to tackle the problem. As we have seen, however, technology is available. The Veritech software is, I understand, used in 14 states in the US. Arguably, lenders would have the resources to bring that in if they wanted to. If lenders will not do something voluntarily, surely it will make sense to require them to do that, because in the meantime consumers are falling into debt. The Government should therefore act as soon as they possibly can.
	Interestingly, we have heard that this issue is not just about the impact on consumers. The 118 118 company has told us that it believes the introduction of data sharing would enhance levels of competition, arguing:
	“It is probable that if real time data was available, and lenders could be more confident in their lending decisions, many more of them would be attracted to this market segment. We would hope and expect that the FCA would be very cognisant of this point in view of its explicit competition objective”.
	That is an interesting view. Where lending is being done, we want to know that it is being done by reputable companies, backed up by the proper technology and proper principles.

Stella Creasy: My hon. Friend is making a fantastic case to show why real-time credit checking is so important in this industry. Does she agree that, in any other industry where money was being lent, the lenders would want to know about any other obligations that the people being lent to had. Is it not curious that this industry seems not to want to know what others are lending to their customers, and does this not reflect their irresponsible approach to their consumers?

Cathy Jamieson: My hon. Friend, who has campaigned for many years on this particular issue, makes a very good point again. It seems to me to make perfect sense for anyone who is lending money to want as much information as possible to ensure that the correct decision can be taken. Our amendment would mean that the FCA would have a duty to introduce a system for sharing credit data so that payday lenders could not continue to evade their responsible lending obligations.

Brooks Newmark: Following the intervention by the hon. Member for Walthamstow (Stella Creasy), I have to say that, unfortunately, many normal credit card companies also do not carry out due diligence, and let individuals’ debts pile up.
	The hon. Member for Cardiff South and Penarth (Stephen Doughty) made a very good point, which was relevant to my beloved Newcastle football club. Unfortunately, Wonga is one of its major sponsors. Does the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) agree that there should be far greater restrictions on advertising, particularly advertising by payday lenders in parts of the country where many individuals are vulnerable to them?

Cathy Jamieson: I thank the hon. Gentleman, whose comments were slightly more supportive than I expected them to be. He made a good point about his beloved football club. I am sure that he agrees with what I said earlier about the amount that is spent on advertising, and the worrying way in which it is normalised by being associated with football clubs and similar organisations. That particularly affects children and young people, as well as perhaps those with on lower incomes.
	The Minister referred to the challenges that would be faced if amendment (b) were passed and the date of implementation were brought forward. I am well aware that Martin Wheatley of the FCA set out those challenges even before writing the letter from which the Minister quoted earlier. He said that the Minister was
	“aware of the challenges that we face in bringing a price cap into force by January 2015.”
	The Minister said in response:
	“The Government is…committed to ensuring that you can access the information you need to design the cap. The Government will bring forward secondary legislation to allow you to collect information to support your new duty as soon as possible.”
	I heard him say that those regulations have now been laid. However, this strikes us as a matter of political will. If he wants the price cap to be introduced, and if he is willing to make the necessary resources available, it seems reasonable for us to press the case for the introduction of the cap by October 2014 rather than January 2015, especially as that would help us to prevent even more families from falling into the clutches of the high-cost credit market this Christmas.
	Will the Minister tell us what will be done to speed up the process of the secondary legislation to which he referred? He described January 2015 as a “backstop”, but it was not clear to me whether he genuinely believed that the cap could be introduced earlier, and I think it reasonable for us to press for that to happen.
	The Minister will be aware that organisations such as Which?, while welcoming the introduction of a cap on the cost of credit, suggest that it should apply to all credit products. Members have already raised the issue of authorised and unauthorised overdrafts, which, according to research findings, are often just as expensive as payday loans. It has been reported that borrowing £100 for 31 days costs £30 with a Halifax authorised overdraft and £20 with some Santander accounts, and that borrowing the same amount for the same period from a payday loan company costs between £20 and £37. Some of the banks may not feel particularly comfortable about that comparison. An unauthorised overdraft is even more expensive. I am told that in the case of the Halifax reward account and the Santander everyday account, a £100 unauthorised overdraft can cost £100 in charges. I wonder whether the Minister has taken that into account during his discussions with the FCA.

Ian Swales: Is the hon. Lady aware that some of those charges apply even if the overdraft lasts for only a day, let alone a month?

Cathy Jamieson: The specific examples that I cited had been reported to me, but I understand that in many instances high charges are applied even if people slip into an unauthorised overdraft for a very short period.
	Let me ask the Minister another question. In a letter to the Minister, Martin Wheatley said:
	“In designing the cap we will, as far as possible, seek to minimise potential avoidance measures. It is possible for firms located in other EEA Member States to provide a payday lending service through the internet to UK consumers within the Electronic Commerce Directive. This is not something that the FCA can mitigate.”
	What assessment has the Minister made of the extent of that problem, and what can be done to reduce that? As we take things forward, it will be important that we do not simply move people from one payday lending system on to something else that could be equally difficult.
	I want to say a few words about the relationship between the banks and the payday lending sector, and to focus on the question of the banks lending to the payday lenders. During the consideration of the Bill in the other place, Lord Mitchell raised this issue, and his understanding was that Barclays lent Wonga over £250 million. When he investigated that further, he discovered that the sum was apparently much higher. He raised concerns about the mission and the guiding principles of the bank and asked whether lending money to the payday lenders so they can then lend it at higher rates to people who need loans is the right thing for the banks to be doing. That raises the question of what the banks’ responsibilities are to those on lower incomes, and also the issue of the banks’ relationships with the credit unions, for example.
	I feel that we must press the amendments we have tabled to a Division. I hear what the Minister has said and I have heard the comments and concerns raised by
	the FCA about the timetable, but I think it is reasonable to press for this to be done as quickly as possible. The Minister has said that January 2015 is the backstop date—the latest point when it could happen. I think it is reasonable for us to bring that forward and to press the amendments on data sharing to a Division.

Andrew Tyrie: On payday loans, I only want to make two very quick points. First, we need to be very careful that EU regulation does not drive a coach and horses through anything we might try to do domestically. I also want to reinforce the point that it is extremely important not to displace what we may disapprove of in the formal sector into the informal sector of very nasty loan shark practices. This will require a great deal of supervision and care.

Stella Creasy: Will the hon. Gentleman give way?

Andrew Tyrie: If the hon. Lady will forgive me, I will not, because I promised the Chair that I will speak for only three minutes. The hon. Lady will have an opportunity to make her own speech in a moment, and she has been a doughty campaigner on this subject for some time.
	I want to speak briefly about part 5 of the Bill, which is the part that creates the payments regulator. This implements a recommendation the Treasury Committee made two years ago. It is worth explaining the origins of our recommendations.
	The Payments Council—which is dominated by the banks and other firms involved in the payments system—decided in 2011 to abolish the cheque, without providing any explanation of how it would provide an adequate replacement. That was a profound mistake, and the Committee decided to investigate. The justification for that decision looked pretty threadbare and the abolition also carried a considerable consumer detriment both for charities and for a lot of people who use cheques. I did 20 radio and TV interviews on this subject after the report was published. I asked each of the interviewers whether they had a chequebook; 19 of them said they did and they very much wanted to keep it. I think that brings home the value of cheques. This does not affect only the elderly; quite a large group of people want to keep some kind of paper-based transaction system for the time being.
	Under pressure the Payments Council did a U-turn and cheques have been retained. The Treasury Committee also looked at how such a crass decision could have been taken in the first place. We concluded that the explanation lay with the structure of the Payments Council itself. Frankly, it has been little more than a poodle of the industry, and it certainly could not reasonably claim to act on behalf of consumers. A reasonable case can be made, however, that it is a monopoly controller of a crucial banking service. We recommended that that responsibility for the payments system be brought within the ambit of regulation, and we gave an outline of how that should be achieved. Amendments 63 to 134 would implement that central recommendation of our report. It is now up to Parliament to ensure that the FCA is much more responsive to the needs of consumers and competition, on this and a good number of other issues, than was its predecessor. I warmly welcome this part of the Bill.

Yvonne Fovargue: I regard payday lending as a new industry. We have heard talk about how Labour did nothing for 13 years, but in the 23 years
	I worked in a citizens advice bureau—I left in 2010—I did not see people with payday loans. I think we saw our first person with a payday loan in 2010. It was always the home credit industry that people came to us about. The payday loan industry—and, in particular, the way in which it targets its market—is a new thing.
	I wish to speak to amendment 155, which relates to the importance of a high-cost payday lender reporting in real time to a third party. The industry is really keen to embrace new technology when it suits it to do so. It has phone apps, and it advertises on television and online. New technology is meat and drink to it. However, it is less keen to operate a real-time database. It has had two years in which to do so voluntarily, and it still cannot come to an agreement on it.
	Part of the reason for that could be that the industry is not keen on guidance. A lot of our payday lenders have American ownership. When I was at a conference recently, I was harassed by some of those American owners asking me what the rules were. I started to explain the guidance, but they were not interested. They just wanted to know about the rules. If something is not written down, they do not want to do it. They do not want to be the first, or just one of a few, to do something. For that reason, this provision needs to be mandated.
	The present reporting system, involving a period of 30 to 60 days, is completely inadequate for a short-term, high-cost loan. A constituent who came to see me recently had taken out 14 payday loans in a week. Yes, that was irresponsible borrowing. I could see that he had been desperate, but it was also irresponsible. The system allowed him to do it. Had the lenders had a real-time database when they agreed to those loans, we could have got them for irresponsible lending. Their excuse, however, was that they did not know how many loans he had already taken out. The lack of a database gives them an excuse to lend irresponsibly, without penalties.
	We also need to consider the responsible customers who pay back their loans on time and for whom taking out a payday loan is a perfectly rational decision. Perhaps their fridge is broken and needs to be replaced urgently, and they are expecting some money at the end of the month. Taking out such a loan in those circumstances could be more sensible than going to a company such as BrightHouse. Those responsible customers get no credit for paying back on time, however, because there is no database and because it is not mandatory to report their repayment record. In fact, on occasions, they are penalised for taking out a payday loan. We need a system that will help people to build up a record of creditworthiness, to allow them to get into the mainstream credit market.
	As we have heard from my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), the present system can deter new entrants to the market. Companies tell me that they would like to get into the market, and that there is a gap for providers of loans between £500 and £1,500 taken over six months to a year at an interest rate of around 30%. However, the business risk is too great, because there would be no way of knowing whether their customers already had payday loans and when they had taken them out. Entering such a market would add to their business risk, and they also worry that raising their rates would involve a degree of reputational risk.
	The Government should look again at this matter and consider mandating the introduction of a real-time database and reporting to a third party. That is important if we are to protect customers and lenders. It is also important if we are to help people to move into a credit stream with lower interest rates, and to help new entrants to move into the market, which we all agree is vital.

Andrea Leadsom: I rise to congratulate the Minister on the excellent introduction of an independent payments regulator. I am amazed that this absolute game changer has not received more press attention, because our banking system still, on today of all days, faces the threat of being undermined in the eyes of consumers by its appalling behaviour. Today, Lloyds bank has been fined £28 million for its appalling treatment of retail customers—that is the biggest fine for retail misconduct ever. I stress that the reason for that, as the investigations by the Treasury Committee and the Parliamentary Commission on Banking Standards showed, is a profound lack of competition in the UK banking sector. Even worse, we even have the last great remaining closed shop, because the Payments Council regulates the banks, yet the banks own the Payments Council, and the banks both clear through and own the payments infrastructure. So there is no incentive to innovate and no self-regulation, and there is a deliberate suppression of competition. What the Minister has done by introducing an independent payments regulator is open that can of worms. The regulator will be a real game changer for the competitive outlook in the UK in future, and I wish to explain why that is.
	The proposal is for the payments regulator to look at access to the payments system. As we know, the big clearing banks access the payments system directly, but challenger banks such as Virgin Money, Metro Bank and Aldermore have to go through an agency clearer. If its systems break down, those banks cannot serve their customers. Not only that, but because these banks have to go through the clearer to access the payments system, they get charged up to 10 times or 20 times as much as the clearers have to pay for one payments transaction. It is an absolute closed shop and it is appalling.
	The payments regulator’s first job will be to examine access to the payments infrastructure and to say to the big banks, “You have to give direct access to every player.” The big banks argue, “You can’t do that because we all mutually underwrite one another’s payments.” As with any other clearing system, however, it is perfectly possible to leave a deposit up front and then to be called for more margin should you be running out of money, so the reason given for not allowing other banks direct access to the payments system is a completely spurious one. That will be item No. 1, and dealing with it will, in itself, create a completely different playing field for all those who want to come into the banking sector.

Ian Swales: The hon. Lady is making a powerful point. Does she agree that a parallel situation would be having the big six electricity companies owning the grid and not allowing any other supplier on to it?

Andrea Leadsom: Yes, my hon. Friend is absolutely right. There are huge parallels between the banking closed shop and the energy closed shop. That is something
	I have been picking up, and I was recently in the media with him addressing this very subject.
	Giving direct access to the payments infrastructure to all banks will reduce the barriers to entry, so I want further to congratulate the Minister on accepting the Treasury Committee’s recommendation that the PRA should have a specific competition objective. That is key, because the barriers to entry do not just relate to access to the payments system; there are regulatory barriers to entry. In other words, “If you are small, you cannot become a bank. Until you become a bank, you cannot become big. Therefore, you cannot ever become a bank.” We have created an environment where there are massive barriers to entry, so the payments system changes will really start to unravel that closed shop.
	Importantly, I wish to put in one plea for full bank account portability. I know that the Minister has absolutely agreed that one of the first jobs of the new payments regulator will be to undertake a full cost-benefit analysis of account number portability. That would mean that if I want to switch banks in future, instead of waiting for even seven days, having to change all my direct debits, standing orders and bank account details, and having to be issued with new credit cards and cheque books and so on, I would simply be able to have my bank account details re-pointed at a new bank and so everything would remain the same. It would be instantaneous account switching.
	When we move our mobile phone account number now, we can take our phone number with us. In a world where we had full number portability, we would also be able to take our bank account details with us. That would be a radical game changer for competition. New entrants could come in and attract new business on the promise that if a consumer does not like them they can always move somewhere else tomorrow. Banks would lie awake at night wondering how to retain their customers through excellent customer services rather than what next they can fleece them with, which happens all too often now.
	Competition is not the only issue. There are two other items I wish to mention. The first is about resolution. We have put in all this effort to try to ensure that, in future, a bank cannot fail. We have increased capital requirements and changed the regulatory structure, which is all to the good. None the less, we know that in future, as sure as eggs are eggs, a bank will fail. What bank number portability will do is to give an instant means of resolution to avoid ever seeing again queues of people down a street trying to get their money out of a bank that they are concerned about.
	If we in the UK become the first country to introduce full bank account number portability, we will be leading the world. By creating a shared infrastructure for payments, we will create a massive business opportunity for UK plc. I congratulate my hon. Friend, the Minister, but urge him to go even further and to support, when the time comes, the prospect of full account number portability.

Paul Blomfield: Like my hon. Friend the Member for Makerfield (Yvonne Fovargue), I rise to speak on amendment 155. The Minister has acknowledged that data collection is at the heart of effective regulation. Like many Members on both sides
	of the House, I welcome the Government’s conversion to capping the total cost of credit, but we need to recognise that it is not a silver bullet.
	When I was fortunate enough to have the opportunity, through the private Member’s Bill ballot system, to prepare the High Cost Credit Bill back in July, I brought together Members from both sides of the House—I am pleased to see that one of them, the hon. Member for East Hampshire (Damian Hinds), is in his place—and all the major consumer voice and debt advice organisations, such as Which?, Citizens Advice, StepChange and the Centre for Responsible Credit, to try to develop a holistic approach to the regulation of payday lenders, with appropriate interventions at every stage of the relationship that lenders have with their borrowers from advertising right through to debt collection. At many points in that relationship, the issue of real-time data collection is absolutely vital to tackle multiple lending. We know that multiple lending is the source of many of the problems that people face. Unable to repay one loan, they are forced to resort to taking out additional loans, moving from a single unaffordable debt to multiple loans, creating completely unmanageable debt.
	As my hon. Friend the Member for Makerfield has pointed out, the current reporting framework for credit reference agencies of 30 to 60 days simply cannot protect people from the problems that result from multiple lending. Only real-time data collection can effectively do that.
	Secondly, we have the impact on the market. As part of the debate on payday lending, many people have argued that we cannot solve the problems by regulation alone and that we need a wider range of more affordable products. That is absolutely right, and real-time data are key to that too, because they will enable lenders to assess risk.
	At a recent hearing of the Business, Innovation and Skills Committee, one of the lenders selected by the Consumer Finance Association as a representative of the industry said:
	“We do not know in real-time what loans the customer has with other lenders.”
	He said that they would
	“love to know that information.”
	It is impossible for lenders properly to evaluate risk, set interest at manageable levels and develop new products. As other Members have said, the opportunity that real-time data would provide for new entrants to the market is also crucial.
	Above all, real-time data are essential to ensuring affordability, which is at the heart of the measures needed to protect people. The industry works in a distorted market. We know that: success is measured by the time it takes to get money into somebody’s bank account, not by the ability to repay. It sounds perverse that many lenders are not primarily concerned about ability to repay. As the OFT has highlighted, up to 50% of payday lending revenue comes from 28% of loans—those that are unaffordable—so providing real-time data is at the core of shifting the business model for payday lending from speed of lending to affordability and is the key to protecting people from spiralling and unaffordable debt.
	I mentioned the recent Select Committee inquiry, which will report soon. My hunch is that it will say something along the lines of the report we published
	two years ago—that real-time data collection is critical to transforming the payday lending industry. We have heard from a number of Members that debt advice agencies are clear that we need real-time data collection and sections of the industry also want it. As the shadow Minister, my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), has pointed out, the industry has been slow to respond. It has been considering the issue for two years and has failed to find a solution that all participants will buy into. As the industry has failed to produce an initiative, it is our responsibility to step in and secure real-time data collection.
	I would cite in support of that assertion the response of the Financial Services Consumer Panel to the Financial Conduct Authority’s consultation on its proposals on payday lending. As Members will know, the Financial Services Consumer Panel is the statutory body that monitors how far the FCA fulfils its statutory objectives for consumers. It is a critical voice in this debate. The panel has said that
	“better creditworthiness assessments must be underpinned by real-time data sharing capabilities.”
	On affordability, it has stated:
	“In order for this information to be available we believe the establishment of real-time data sharing is vital.”
	It has also stated:
	“In addition to limiting rollovers, the Panel also feels that real-time data sharing is essential in ensuring people do not end up with excessive numbers of loans at the same time.”
	It goes on:
	“The speed at which loans are granted is often cited as the reason for”
	unaffordability and rollovers, and:
	“Real-time data sharing would overcome this and should be something the FCA encourages…There are examples of other jurisdictions, such as Florida…where this has been achieved.”
	Indeed, the Minister cited Florida as an example earlier.
	The panel comes to the conclusion that it strongly calls for the establishment of real-time data sharing and I hope that the Government will listen to that.

Sajid Javid: With the leave of the House, Madam Deputy Speaker. I thank all hon. Members for their contributions. It has been a good debate and a number of important issues have been raised, so I want to take a few minutes to respond.
	The shadow Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), started by making a number of points on the payments system regulator. One issue she raised was whether there could possibly be a gap before the payments system regulator came into full force. That is a reasonable question and of course we will do all we can to minimise that.
	It is worth pointing out that although the Payments Council, to which my hon. Friend the Member for Chichester (Mr Tyrie) referred, has not always done a spectacular job as an industry body, particularly on cheques, it has recently put in place some useful innovations under the influence of the Government, such as the current account switching service. It is also developing a mobile phone database. We have been assured that such initiatives will continue and will not slow down because of the plans to set up a payments system regulator.
	The hon. Lady mentioned VocaLink and concerns about payment service providers and who will be designated as part of the payments system and therefore be regulated. As she knows, and as set out in the clauses, the Treasury will designate the systems. To provide clarity we set out in the other place and elsewhere during the consultation the kinds of systems that we expect to be designated, which will be the main interbank systems, international card schemes such as BACS, CHAPS, Faster Payments, LINK, Cheque and Credit, Visa, MasterCard, and Amex. I hope that is helpful.
	A number of hon. Members spoke to the Opposition amendment on data sharing, amendment (a), including the hon. Member for Makerfield (Yvonne Fovargue), who I know has considerable expertise from her experience at Citizens Advice, so I take her comments very seriously indeed. The hon. Member for Sheffield Central (Paul Blomfield) referred to his private Member’s Bill, which, as he said, had cross-party support in the House. What hon. Members, including the shadow Minister, said on the subject of data sharing is very important and I agree with all the concerns they articulated, especially the importance of real-time data collection and the difference that it can make. I share all their concerns and I agree with the benefits of consumer protection that data sharing can provide. The hon. Member for Kilmarnock and Loudoun mentioned StepChange, a charity whose representatives I have met a number of times. I discussed the matter with them and they, too, raised a number of important points. I agree with their analysis.
	We all agree about the benefits of sharing information. The question is what we can do about it. The good news is that, because we agree, the Government have discussed the matter with the regulator, the FCA, which made a clear commitment that it plans to take action. It has already started down that course and is working with the industry on this. In the letter that I referred to at the start, the FCA said clearly that if the industry does not help to bring about the sharing of information sooner rather than later, it will not hesitate to make rules. It already has the powers to make such rules.

Yvonne Fovargue: Will the Minister therefore set a time scale for the FCA to give the industry to work towards voluntarily, which will be imposed on the industry if it does not meet it?

Sajid Javid: There is already the tightest possible time scale. In his letter today Martin Wheatley of the FCA says that the industry is already working on this. He states:
	“If the industry cannot overcome the obstacles, and we are best placed to bring about data-sharing we will not hesitate to act.”
	The chief executive of the FCA and the Government understand the importance of this. We can all agree on its importance and the need to take action quickly. I do not consider it necessary to pass any legislation as action is already being taken.

Cathy Jamieson: To follow up the point from my hon. Friend the Member for Makerfield (Yvonne Fovargue), it would the help the House to know whether the Minister has had discussions on a time scale.

Sajid Javid: I have had discussions with the FCA about this. We expect that by the end of next year the process will be set up, but there are a number of issues to be dealt with before that can be confirmed with more certainty. That is the time scale that the industry is working towards.
	Let me move on to some of the other issues that were raised in relation to high cost credit. The hon. Member for Kilmarnock and Loudoun mentioned excessive bank charges, and I agree with her concerns. The Government are concerned about default charges across the unsecured lending market, not just the payday loan market. The Government are strengthening regulation for consumer credit across the board by giving responsibility to the FCA. The FCA recently committed to consider carrying out a thematic review of market practice in relation to fees and charges, once it has full regulatory authority over consumer credit.
	I will turn briefly to the timetable for introducing a cap on the total cost of payday lending, which we discussed earlier. As the shadow Minister said, 2 January 2015 is just a back-stop. Of course I would like to see it introduced sooner, as I think we all would. However, as we have discussed, it is better to have a cap that works and protects consumers, rather than one that has been forced on the regulator by an artificial time scale. It is important to listen to the FCA, the regulator that will establish the cap, so it is worth reiterating what Martin Wheatley has said:
	“It is very important that we are clear with you on the practical implications of any further shortening in the timetable, the principal one being that we believe it is impossible to have as strong a cap based on a shorter deadline. To such a tight timetable we would be forced to perform less analysis on the methodology and level for any cap, and so would be forced to set the cap at a more conservative level (that is, higher) to reflect the inherent legal risks. This cannot be the intended outcome from a consumer protection standpoint.”
	It would be foolish for this House to ignore the FCA’s view, as I am sure we all share the objective of having a cap that works and protects consumers.

Stella Creasy: We know that 1 million families in this country have already said that they will pay for Christmas this year with a payday loan because of the cost of living crisis they are facing. The Minister is talking about delaying the introduction of any form of cap until 2015, so there is a real question about the impact that might have next Christmas, which will be the default position of not supporting the proposed amendment. Introducing even a conservative cap before next Christmas might do something to lessen the damage that those toxic types of lending are doing to people, given that the cost of living crisis will continue for the year ahead.

Sajid Javid: I thank the hon. Lady for her comments. As she will have noted from the letter I just quoted from Martin Wheatley, one of the concerns about a conservative cap is that it would be open to much greater legal risk. It would serve nobody in this House if there was some kind of legal challenge to a cap and how it works if the process has not been followed properly and if some people believe that the FCA has not followed its own rules, particularly on the time for consultation. Had the hon. Lady been here at the start of the debate, she might have heard that the Competition Commission’s
	investigation into payday lending, which is already under a tighter timetable than it usually has—it is normally around two years, but it has agreed to make that 18 months—will report in November next year. I think that everyone would agree that it is very important that the FCA takes into account the results of that investigation.

Cathy Jamieson: The Minister might have already answered this, but what specific legal risk has he identified in relation to the cap being introduced sooner rather than later?

Sajid Javid: I refer the hon. Lady again to the letter from Martin Wheatley, which states that the FCA
	“would be forced to set the cap at a more conservative level (that is, higher) to reflect the inherent legal risks.”
	I believe that she has a copy of the letter.
	I will finish by answering an important point the shadow Minister made about the possibility that lenders from elsewhere in the European economic area will be able to passport their services and avoid UK legislation. She is entirely right to make that analysis, because that is indeed possible under the EU commerce directive and the single market in financial services. There are mitigations, although the situation is not ideal. Under the EU consumer credit directive, there is not a cap but there are certain rules that all lenders within the EU need to follow. Of course, there is nothing to prevent the UK regulator from contacting the comparable authority in another EU-based country to see whether there is any way in which pressure can be put on indirectly through the two bodies working together.
	Lords amendment 63 agreed to.
	Lords amendments 1 to 40 agreed to, with Commons financial privileges waived in respect of Lords amendments 35,37 and 40.
	Lords amendments 42 to 62 agreed to.
	Lords amendments 64 to 154 agreed to, with Commons financial privileges waived in respect of Lords amendments 149 and 150.
	Before Clause 13
	Amendment (a) proposed to Lords amendment 155.—(Cathy Jamieson.)

Question put, That the amendment be made.
	The House divided:
	Ayes 225, Noes 289.

Question accordingly negatived.
	Amendment (b) proposed to Lords amendment 155.—(Cathy Jamieson.)
	Question put, That the amendment be made.
	The House divided:
	Ayes 228, Noes 297.

Question accordingly negatived.
	Lords amendments 155 to 184 agreed to, with Commons financial privileges waived in respect of Lords amendments 162, 163, 169, 171, 172, 173 and 175.
	Motion made, and Question put, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 41;
	That Sajid Javid, Nic Dakin, Cathy Jamieson, Amber Rudd and Ian Swales be members of the Committee;
	That Sajid Javid be the Chair of the Committee;
	That three be the quorum of the Committee.
	That the Committee do withdraw immediately.—(Sajid Javid.)
	Question agreed to.
	Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

John Denham: On a point of order, Madam Deputy Speaker. Earlier this afternoon I was alerted to a tweet from the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), which referred to his parliamentary written answer to me on parking charges. It states:
	“when the right hon. Member for Southampton, Itchen (Mr Denham) was Secretary of State for Communities and Local Government…he noted that it was…Government policy to encourage councils to “creatively” and “extensively” make use of parking charges”.—[Official Report, 10 December 2013; Vol. 572, c. 161W.]
	That is a gross distortion of the evidence given at the time. As the submission makes clear, the word “extensively” was not used as a description of Government policy, but as a description of fact about the activities of local councils. The word “creatively” was not used in relation to parking charges, but as an approach to improving accountability and responsiveness in service delivery. I have a fairly thick skin, but such a deliberate and cynical misrepresentation is surely out of order. Will you, Madam Deputy Speaker, advise me what steps I can take to have it put right?

Dawn Primarolo: Obviously, the contents of comments on Twitter are not a matter for the Chair, but if this has occurred, it is an extreme discourtesy to the right hon. Gentleman, and I hope that the Treasury Bench has taken note. Ultimately, Ministers are responsible for what they say, but perhaps in future the Minister could say it in a written answer and be accountable to the House. That way, I could making a ruling; otherwise, I cannot. Nevertheless, the right hon. Gentleman’s point is on the record.

Business without Debate

Delegated Legislatoin

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Infrastructure planning

That the draft Infrastructure Planning (Business or Commercial Projects) Regulations 2013, which were laid before this House on 31 October, be approved.—(John Penrose.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Defence

That the draft Armed Forces (Remission of Fines) Order 2013, which was laid before this House on 24 October, be approved.—(John Penrose.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Energy

That the draft Renewable Heat Incentive Scheme (Amendment) (No. 3) Regulations 2013, which were laid before this House on 28 October, be approved.—(John Penrose.)
	Question agreed to.

Sittings of the House

Motion made, and Question proposed,
	That on Thursday 12 December there shall be no sitting in Westminster Hall.—(Tom Brake.)

Philip Hollobone: I apologise to my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) for delaying his extended Adjournment debate, but given that he was expecting a half hour’s debate but can now have the best part of two hours and 15 minutes, I hope he will forgive me on this occasion. As somebody who no doubt has travelled a lot on the West Anglia rail line, he will be used to delays in any event.
	I wished to catch your eye, Madam Deputy Speaker, because we have just had absolutely no explanation from the Deputy Leader of the House for why tomorrow’s sitting in Westminster Hall is to be changed. [Interruption.] The Chief Whip, who is just leaving, will be familiar with this argument, because we had this debate when he was Leader of the House. The Leader and Deputy Leader of the House are being too cavalier in simply excising three hours of parliamentary airtime. I take the view, and I hope other right hon. and hon. Members do as well, that the sittings in Westminster Hall are extremely important. If they were not, the House would not have decided to set them up in the first place. I am pretty sure that the Liaison Committee also regards them as important, because it regularly schedules important debates from the various Select Committees to be debated for up to three hours in Westminster Hall.

Alan Beith: I appreciate the hon. Gentleman’s concern for the Liaison Committee, but I can assure him that it wants to take cognizance of other events happening tomorrow adjoining Westminster Hall and that I have made provision for the debate that my right hon. Friend the Member for Gordon (Sir Malcolm Bruce), the Chairman of the International Development Committee, was going to introduce tomorrow to take place on another suitable occasion soon.

Philip Hollobone: I am sure that the right hon. Gentleman is acting with the best of intentions, but he was sitting in his place, as I was sitting in mine, when the Deputy Leader of the House rose simply to move this motion formally, without giving any explanation of the circumstances tomorrow whatsoever. I think the House deserves a better explanation. I understand that tomorrow there is an important celebration in the main Westminster Hall relating to the death of Nelson Mandela. No doubt, that will be a wonderful occasion, and it is right for the House to celebrate the great man’s life in that way, but we have been given no explanation for why the sitting in the small Westminster Hall tomorrow afternoon is to be cancelled. Is it to do with security, logistics, staffing? I do not know. I would welcome an intervention from the Deputy Leader of the House, if he wants to apprise the House of the reasons, but as far as I can tell no one in the Chamber knows why the sitting is to be cancelled.
	I have no doubt that the Chairman of the Liaison Committee is acting in good faith, but scheduled on the Order Paper, as we speak, are two very important debates from the International Development Committee.
	I see in his place the esteemed Chairman of that Select Committee, who has been good enough to attend this afternoon, no doubt also anticipating an explanation from the Deputy Leader of the House for cancelling the sitting. These debates would have been on the subjects of global food security and violence against women and girls.

Malcolm Bruce: Perhaps to help the hon. Gentleman let me explain that I was asked whether the Committee would agree to postpone tomorrow’s debates. It was not me who took the decision; my Committee took it. Our decision was that, in the circumstances, provided we were reassured that we would be able to conduct the debates in short order subsequently, we would agree to do so. We have already been offered dates for both debates in January.

Philip Hollobone: I have no doubt at all that the right hon. Gentleman, along with his Committee, has acted entirely in good faith. I put it to him, however, that his rescheduled debates will replace other debates, which will never see the light of day, because we are losing three hours of important parliamentary airtime—with no explanation to this House of why that is happening.
	If on today’s Order Paper, along with this motion, a suggestion had been made—I guess it would have been another item rescheduling the sitting in Westminster Hall to another day—I could just about have lived with it. Why have we had no suggestion from the Deputy Leader of the House that the International Development Committee have its debate in Westminster Hall tomorrow morning, before the Nelson Mandela celebration takes place there? Why does today’s Order Paper not suggest that the International Development Committee has its important debates on Monday afternoon from 1.30 to 4.30 or from 4.30 to 7.30? Sittings in Westminster Hall take place on Monday afternoons so why, given the importance of these subjects and the reassurance of the Chairman of the International Development Committee that his debates would take place in short order, did the Deputy Leader of the House not make provision for these debates to take place on Monday?
	I never had the privilege of meeting Nelson Mandela, but I am pretty sure that he was concerned about violence against women and girls. I am pretty sure, too, that he was also concerned about global food security. I am thus pretty sure that he would have wanted the British House of Commons to discuss those important items. I have a feeling that he would have been rather upset if his celebration—if I make the correct assumption—displaced three hours of important debates on those crucial subjects.
	I do not think I am being unreasonable in saying that, in putting forward this motion tonight, in failing to provide us with an explanation for why the Westminster Hall sitting is not going to take place and in not putting forward an alternative time slot, the Leader of the
	House and the Deputy Leader of the House are not playing fair by this House. This is a matter I have raised previously. I regard debates in Westminster Hall as very important, and I am pretty sure that the House of Commons does, too. It is simply not good enough to come here at the end of today’s sitting to wipe out three hours of parliamentary airtime on important debates without first giving the House an explanation or secondly providing an alternative time and date for those debates to take place.

Tom Brake: In the circumstances, I think it appropriate to make a few points. First, this motion will allow us to resolve not to sit in Westminster Hall tomorrow. This follows the decision of the International Development Committee, many of whose members one assumes will want to attend tomorrow’s events in Westminster Hall to commemorate Nelson Mandela, not to proceed with its business, as agreed by the Chairman of the Liaison Committee, who intervened a few minutes ago to confirm that.
	The hon. Member for Kettering (Mr Hollobone) made a number of alternative proposals about the timing, for example, although I do not know whether the International Development Committee considered that because I was not party to the discussions. If we do not proceed with this motion, the impact would be that the business would still appear on the Order Paper and a Chair, Clerks and Doorkeepers would need to be on a rota to attend tomorrow’s business even though it was not taking place. On that basis, it seems sensible to ask the House to resolve the matter in order to clarify the position to the public, and for the convenience of everyone else.

Bob Stewart: My right hon. Friend has just mentioned the public. Given the importance of the Westminster Hall debates, some members of the public may have made arrangements to come to London specifically to attend them, so we are probably inconveniencing members of the public as well.

Tom Brake: My hon. Friend has made a telling point. I cannot disagree with him: some people may indeed have been inconvenienced as a result of this decision. I therefore hope that the alternative dates will be widely publicised to enable them—we hope—to attend the debate in future. I also hope that they will take account of the fact that there was a strong demand for this event, and the fact that, because of the way in which things happened, it was not possible to predict that it would clash with a debate initiated by the International Development Committee that they had wished to attend.
	Question put and agreed to.
	Resolved,
	That on Thursday 12 December there shall be no sitting in Westminster Hall.

WEST ANGLIA RAIL LINE

Motion made, and Question proposed, That this House do now adjourn.—(John Penrose.)

Alan Haselhurst: It was almost three years ago, on 19 January 2011, that I last had the opportunity to address the House on the subject of the West Anglia rail line. The line runs from Liverpool Street to Cambridge and beyond, serving many stations in my constituency and in other important towns and villages. In the speech that I made in 2011, I castigated every Government from 1985 onwards for first willing the expansion of Stansted airport—which is served by the line—and then branding the M11 corridor, as it is described, ripe for major development, while doing absolutely nothing about the capacity or quality of service on a line that served all those different needs. I regret to say that not much has changed in the intervening years, apart from the fares that long-suffering passengers have to pay.
	I acknowledge that there was a timetable change in December 2011—in the teeth of opposition from Transport for London, I should add—which made possible the reinstatement of some peak services. That returned the journey time between Audley End and London to something like it was in 1977: although it was not quite as good, there was certainly a major improvement. I also acknowledge that, as the then Minister, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), told me in her reply to my speech in January 2011, some of the new type 379 train units did come our way. I am not sure that that was entirely due to my persuasion; it was probably rather more to do with the fact that business at Stansted airport had slumped rather badly, and 10 of the 30 new train units were spared to supplement services for other passengers on the line.
	Despite those two welcome steps, however, not much has changed. I am tempted to use the term, “Same old railway.” There is no new track and no sign of fleet replacement. It is true that there is a new train operator, Abellio, under the colours of Greater Anglia, and a new airport owner, with Manchester Airports Group having bought Stansted from BAA.

Robert Halfon: My right hon. Friend is an incredible champion for commuters in our area and I am very proud to have him as my neighbouring MP. I recently did a survey at my local railway station, Harlow Town. Some 73% of commuters said they had to stand too often, and 60% of them want longer trains. Does he agree that there needs to be investment in rolling stock and that the trains that go through Harlow need to be extended?

Alan Haselhurst: I certainly do not disagree with that in any way, and I would think that quite a number of other colleagues whose constituencies are served by this railway line would echo my hon. Friend’s sentiments. I acknowledge his support in the campaign to bring the Government’s focus more sharply on to this line.

Mark Prisk: I strongly endorse what has been said: my right hon. Friend is an informed and persistent challenger of what has been a poor service for all our constituents. Does he share my concern that, while we understand the problems
	created by the storm this autumn, we noticed that it was our line that was least able to cope? We had three days—not one—of disruption. Does he share my view that alongside the overcrowding, poor service and rising fares, we simply seem to be getting what I would describe as a Cinderella service?

Alan Haselhurst: I am grateful to my hon. Friend, who has been another staunch ally in the fight for a better deal for regular passengers on the line. I agree that that is another example of how our service has fallen below the standards, which have been raised in certain other parts of the country. In terms of statistics, it is possible to argue overall that a higher performance rating has been achieved, but when the lapses occur, they are very serious indeed.
	I could add to what my hon. Friend has said by describing my experience this morning. At the Audley End ticket office there are two counters. Both were closed, with a notice up to say that the one person who was in on this particular morning would be back at 9.45, which was one minute after the departure of the train to London. The rumour was that the ticket agent was having a break, but that meant that there were no tickets available to purchase except from one of the machines on the platform, and those machines are not flexible in what they can offer—they can only provide fairly simple fares. It would certainly appear to be a shambles that we do not have a proper standard of service in that way.
	As I have said, there is a new train operator and a new airport owner, and there is seemingly a new franchise policy because when my right hon. Friend the Member for Chipping Barnet spoke in response to my Adjournment debate in 2011 she suggested that good times would come when we had new longer franchises, but I am not sure that that policy still holds; that may have now changed to having rather shorter franchises. I would be interested to know what my hon. Friend the Minister has to say on that subject.
	Indeed, in addition to those other new circumstances, we have a new Minister. In fact he is the second since the previous debate. [Interruption.] Yes, I have no doubt at all that he is an excellent Minister, but he will be judged in part by the nature of his reply to me and my hon. Friends.
	What is absolutely incontrovertible is that there has been no investment in the line. That is the problem.

Bob Stewart: I am very interested in this line because I have been to Cambridge four times in the last year, and on two occasions I had to take a very long journey on buses. My right hon. Friend says the line is poor, and that seems to be borne out by my own empirical experience as a Member of Parliament from south of the river.

Alan Haselhurst: I am sorry that my hon. Friend was inconvenienced on those occasions, but that illustrates a further problem that we experience on the line. I hope that the problem did not prevent him from collecting the honorary degrees that he was no doubt going to Cambridge for.
	I might have suggested that not much has been happening, but in fact I suspect that things are now stirring, although not necessarily in a helpful way. The
	Mayor of London has shown great interest in acquiring control over part of this railway. More disturbingly, my right hon. Friend the Secretary of State seems to have given assent in principle to that taking place. The Mayor would then have control over the services to Enfield Town, Chingford and so on, although not further up the main line between Tottenham Hale and Broxbourne. That is interesting, because one of the justifications for bringing together the services out of Liverpool Street in a single franchise was that it would make the operability of Liverpool Street more effective. If a second franchise holder were to be introduced, that could start to complicate matters in what is already a very constricted station.
	My next point is that, to run those services, the Mayor will need some rolling stock, and I suspect that a portion of the rolling stock currently being operated flexibly by Greater Anglia would be painted a different colour and handed over to the Mayor. It is not clear, however, what would replace that rolling stock. I regard this as an aggressive, acquisitive policy on the part of the Mayor. I am not denying that it could be good for the people he serves, but it would have an adverse effect on the people served by me and by my hon. Friends the Members for Hertford and Stortford (Mr Prisk) and for Harlow (Robert Halfon) and others. Also, it cannot be right if there is to be no investment in the track. The situation would become altogether different if we had four-tracking. It might then be possible to accept that the two operators could work without the one interfering with the other.
	A further disturbing matter, from the point of view of railway passengers, is that Stansted airport is starting to expand again in terms of passenger numbers, and I imagine that, under the dynamic new ownership of the Manchester Airports Group, those numbers will continue to rise over the next few years. That will build demand to a point at which we will look back on the history and say to Ministers, “Excuse us, but we would now like to have back those trains that you allowed to run on the Cambridge line to serve the commuters, so that the original intention of having 12-car trains going to the airport can be fulfilled.”
	I have no particular complaint about there being a decent rail service to the airport; indeed, I am in favour of it. However, it could pose a second threat to the fleet that is available to Greater Anglia. The question would then arise: where are the substitute carriages to come from? I am advised by Abellio that there are no trains that can obviously be cascaded down to us. We would, I suppose, be grateful for second-hand trains, but we have been living with second-hand trains for far too long anyway and we deserve a full fleet of new trains.
	A report has appeared recently from an organisation called London First. It puts forward what, on the face of it, seems a reasonable proposition. I replied initially to Baroness Valentine, the chairperson of the organisation, to say that I welcomed the contribution to the debate, and that anything that brought attention to the needs of the line was to be welcomed. But the more one examined the proposal, the more one became aware that the clue was in the title—London First; the approach was just that, and it would not be to the advantage of those of us who are further away from London and rely on services on that line. London First is proposing a third track
	over a short distance north of Tottenham Hale, as much as anything to facilitate services to Stratford. In principle, I see nothing wrong with that, but the proposal is not going to be to the benefit of the passengers we represent in ever-increasing numbers. It is a diversion from the real need of the line, which is to get four-tracking so that flexibility can be achieved.

Mark Prisk: My right hon. Friend mentions the London First report, and perhaps I might add my thoughts on that in a moment, if I can catch your eye, Madam Deputy Speaker. The report is a distraction, but is he aware that, worse for my constituents, it includes ideas of looping around Bishop’s Stortford and Sawbridgeworth, which would leave my commuters watching visitors from abroad getting a better service than those who actually pay for it?

Alan Haselhurst: I agree. I do not represent people in Sawbridgeworth and Bishop’s Stortford, but I am sufficiently familiar with the two places, and passing through on the train, to wonder exactly how these passing loops are going to be effected without the most appalling disruption. In any case, I do not believe they serve any real purpose. Four-tracking between Coppermill junction, south of Tottenham Hale, and Broxbourne is the way in which most people’s interests can be served. If we take our eye off that goal, we will end up with miserable scraps. I worry that, if London First gains favour for its proposal, which is not only inadequate but very damaging the further north one goes, it will be all too easy for Network Rail or the Department for Transport to say, “Job done, we have helped there, at last” and for that to be it. It would not do anything to transform the railway.
	We must also consider the interest in Crossrail 2 and suggestions that perhaps it would serve to bring people back and forth from Stansted airport. I am in favour of the regional version of Crossrail 2, because it makes sense to link at Cheshunt, bringing in to the west end people who do not necessarily want to go to the City, where Liverpool Street station is situated. But it is not helpful to have eyes diverted from the West Anglia line and suddenly say that we might start spending money on Crossrail 2. I found it extraordinary that that possibility was apparently being touted by another representative of London First in a different forum, with the suggestion to get Crossrail 2 and then four-track between Cheshunt and Broxbourne. That seemed entirely at odds with what is in the main London First report. Therefore, I am not too happy about being diverted in that direction; we need to concentrate on the main line and seek investment there.
	I have been saying that the Mayor, London First and the airport activity are stirring, but, sadly, not a great deal appears to be stirring in the Department for Transport. I wish to say straight away that I am absolutely behind what is being invested in our railway network throughout the country, and I am also a strong supporter of HS2 and a great believer in the railway. As such, it is understandable, surely, that I am a great believer in the railway that serves my constituents, and that is the one that is constantly forgotten. It has been forgotten since 1985 and something has to be done to reverse that position. Our line has simply not been favoured. I accepted that it was reasonable to wait for the report by Sir Roy McNulty, but surely the lessons to be learnt
	from his report have been digested by now. Unfortunately, what has happened is that we have seen an extension to a franchise. There will not be a new franchise—we are not sure of what length—until 2016. The scope for continued indecision is considerable and deeply worrying, because fares will no doubt continue to rise in that time.
	I say to the Minister, who I am delighted has this portfolio—he might feel slightly less delighted after my remarks—that we need more than warm words. We are looking for cast-iron assurances that the problem of the West Anglia line is understood and that something meaningful will be promised within a reasonable time. We are looking for investment in track and trains, as that is, after all, investment in people.

Mark Prisk: I repeat my view that the good people of Saffron Walden are very fortunate to have, in my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst), an informed and persistent champion. It has been a pleasure working with him on these issues. He has taught me more about the railways than I thought that I would ever know. Indeed, there is possibly more to learn.
	We are talking about a railway line that is, sadly, the Cinderella of railway services. Those of us in the northern and eastern home counties have watched other investments being made and listened to the way in which priorities have been set elsewhere. Our commuters, as my hon. Friend the Member for Harlow (Robert Halfon) rightly points out, feel that what they have seen are rising fares, falling standards, overcrowding getting worse and a sense that they are being left behind. Indeed this autumn the overcrowding has got worse. When we saw the storm, we understood the need to close the railway lines on the day. On the second and third days, our constituents found themselves not only inconvenienced but without the information they needed to make alternative arrangements. They rightly complained to us, which is why we want to challenge and speak with the Minister.
	Very often, when commuters get information, it is the wrong information. The options available to those who work hard and want to get to work are immensely limited.

Robert Halfon: I am hugely grateful to my hon. Friend for giving way. He is also a neighbour, and I am delighted to serve alongside him. Does he not agree that it is important to invest not just in the rolling stock but in some of the smaller stations? He will know that Harlow Mill station is in bad need of refurbishment. We need to consider that, because commuters have a right to a proper station when they need to go to work.

Mark Prisk: My hon. Friend is absolutely right. The quality of the rolling stock, which my right hon. Friend has mentioned, is important, as are refurbishment and expansion of the railway stations and investment in track. It is that final point on which I want to focus in my brief remarks.
	I strongly endorse the analysis and the solution that we have just heard from my right hon. Friend. Having looked carefully at the proposal from London First—I am the last person to want to decry positive suggestions for investment—I must warn the Minister to be careful, as it makes no sense. The good folk of Bishop’s Stortford and Sawbridgeworth ask me why they should pay good
	money to watch folk being whisked in to this country—they are very welcome—on a better service than that which they receive, which they actually pay for . That causes them natural concern.
	There is a real danger of our being diverted, as my right hon. Friend rightly said, from the real opportunity. The core of the issue is the funnel—the last five or six miles into Liverpool Street—running back towards Tottenham Hale. If we solve that capacity issue, people in London—whom I am sure the Mayor is concerned about—Essex, Hertfordshire and Cambridgeshire will see a service that is punctual and has the capacity to deal with many of the changes in our area—an increasingly important issue, because alongside that investment is the debate about the number of additional homes that need to be built in our areas.
	Sadly, we have a railway line that is recognised as having had over recent years the worst record for overcrowding of almost any railway line coming into London. With the prospect of thousands more homes, which we understand and recognise are needed where there are difficult and long council waiting lists, our constituents will rightly ask how on earth the railway line will cope and what that will mean for their ability to get to work.
	The West Anglia line is a line for people in London but it is also a line for Hertfordshire, Essex and Cambridgeshire. Investment is undoubtedly overdue, but the additional housing means that it is urgent that we have some signal that we will get the investment required. Four-tracking into Liverpool Street is the key and the Minister should not be diverted or distracted by the suggestions that we might loop one town or another. That will not solve the central problem and that is the key message that I and my constituents want to send to the Department for Transport and our excellent Minister today.

Stephen Hammond: I congratulate my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) on securing this evening’s debate on investment in the West Anglia line. I was, of course, slightly perturbed when he opened his speech with remarks about castigating every Government since, I think, 1970—I cannot quite remember the year.
	This is an important matter to my right hon. Friend and his constituents, to other Members of Parliament and their constituents and, of course, to all passengers using the line. My right hon. Friend and my hon. Friends the Members for Hertford and Stortford (Mr Prisk) and for Harlow (Robert Halfon) have all made the point that the two-track commuter line between London and Stansted and Cambridge is very busy. The commuter flows it carries are some of the busiest around. It covers not only the areas they have talked about but carries commuter flows from Essex and north-east London and provides the link with Stansted airport.
	I recognise that demand has been growing quickly and significantly. To explain to my right hon. and hon. Friends some of the investment that has been made, it might be helpful to consider the line in separate parts. Demand has been growing quickly, particularly in the lower Lea valley, and the Government’s rail investment strategy has provided approximately £80 million to
	deliver three and four-tracking at the south end of the route. That will allow the introduction of some new services, will increase operational reliability, and should support regeneration in the lower Lea valley. I hope that my right hon. and hon. Friends will recognise that that shows that the Government are aware of the need for four-tracking.
	The Department also rightly recognises that there is some suppressed demand as regards the need to connect the West Anglia line with Stratford in east London. My right hon. Friend made that point. We are taking steps to address it and Stratford is increasingly becoming a destination for leisure, retail and entertainment in its own right. It is therefore becoming a significant transport interchange. It is important that we ensure that the connections into that significant place in east London are operationally the best they can be.
	From 2019, Stratford will become part of the Crossrail network through Crossrail 1, providing direct connections to a large number of destinations. I accept that that will have a knock-on effect through London and the West Anglia line. The important point is that as soon as the Crossrail operation starts in 2017 there will be the chance to introduce new connections to the West Anglia line. I recognise that this is not in my right hon. and hon. Friends’ constituencies, but to suggest that the Government have done nothing about the line is not exactly true as there has been investment in new stations at the southern end of the line and the new stations fund is also starting to work through, as can be seen with the new station at Lea Bridge and the new services between Angel Road and Stratford.

Robert Halfon: As I mentioned to my right hon. Friend, I have done a survey with commuters. We know about Harlow Town station, but one of the big concerns was the lack of facilities at Harlow Mill station. The ticket office is open only during weekday mornings, closing at 11.15 am. There are no toilets and very little shelter from bad weather, despite trains to London leaving once every hour. Will my hon. Friend look at this and see whether there are any plans for the Government to invest in this station?

Stephen Hammond: My hon. Friend is right to point out the concerns of his constituents. As Ministers, we try not to get into the micro-management of the toilets of various stations, as he will understand. None the less, I will look at the matter.
	The point which I hope my hon. Friend will consider is that, yes, there are some concerns about ticket offices and this is a feature across the whole network, but many people are choosing to buy their tickets in different ways. Although important, ticket offices are not central to many people’s buying habits. He is right that there should be facilities, and there has been a new stations fund and a station improvement fund.
	My right hon. Friend the Member for Saffron Walden spoke about the new franchises and what might happen. I hope he might have had a chance to look at the east coast prospectus. Although we are not saying that every new franchise will be of a particular length, we are encouraging longer franchises, particularly in that franchise and the prospectus that we have released. I hope my
	right hon. and hon. Friends will acknowledge that we have given the operators the chance to recognise some of the things they could do to the benefit of customers outside the standard package. There is a real determination from the Department in the new round of franchising to understand that the consumer must be at the heart of the franchise bids. I hope the prospectus that we have released for the east coast main line will show that.
	There is demand not only at the southern end of the line. Cambridge is a fast- growing economy, making a significant contribution to the local and the national economy. That is why we continue to make significant investments in that part of the route as well. The station at Cambridge will undergo significant redevelopment, provided the planning authority comes through. In addition, we are working with Network Rail and Cambridgeshire county council to develop plans for a new station at Chesterton, approximately 2 miles north of the city centre, as well as providing direct access to the rapidly expanding science park, for which rail connections are key.
	Throughout the line brand-new 379 class trains are already operating the service between London Liverpool Street and Cambridge, which is benefiting customers along the whole West Anglia main line, including, as my right hon. Friend rightly acknowledged, his constituency, particularly at Audley End. These trains are modern, spacious, high performing, high capacity and highly reliable, and they are widely recognised by passengers as a benefit and an increase in the service.
	I shall make a few specific remarks about my right hon. Friend’s constituency, or I would be castigated for failing to do so. I have just mentioned the 379 class trains and I know he recognised that his constituents were benefiting from them. I hope the introduction of those trains will see continually improving reliability on the route. My right hon. Friend, as well as my hon. Friends the Members for Harlow and for Hertford and Stortford, commented on the concern about overcrowding. This is undoubtedly the challenge for the next decade. It is the challenge of the success of the railways. Twenty years ago I used to travel from Hertford North and Hertford East. Services may or may not have got worse in the past 10 years, but they are a significant improvement on 20 years ago when the line was known for its unreliability. This is the challenge of success. Privatisation has brought a doubling of the number of passengers on broadly the same network as we had 40 years ago. That success means that we now have to meet the challenge of overcrowding.
	With the introduction of the new Thameslink trains, which will come into service post 2016, and some of the financing of that rolling stock cascade, there will be an opportunity for the trains currently being used on Thameslink to be cascaded to other locations. There is no reason why they could not be used on the West Anglia rail line in future.

Alan Haselhurst: My hon. Friend moved rather swiftly from lauding the type 379 as a high-performance train to identifying some Thameslink trains that might be passed down to us. There is quite a distinction there. I had rather hoped that he might indicate that we would not lose the 379s in the way I suggested, or indeed that he might try to give some encouragement to the idea that whoever gets the franchise after 2016 will be committed to having more of the 379s or their equivalent.

Stephen Hammond: I can give my right hon. Friend some Christmas cheer by confirming that the 379s will be staying on the West Anglia rail line and will not be moved in the way he suggested. When we consider the new franchise for post October 2016, I am sure that the need for rolling stock enhancement will be part of the tendering process.
	As I highlighted at the beginning, I recognise that there is a key limitation on the West Anglia rail line: it is a very busy two-track railway. The plans to three-track and four-track some of its southern sections will undoubtedly be welcomed right along the line. However, my right hon. and hon. Friends are right to recognise, and to pursue, the aspiration for faster and more frequent services. That could be met only by infrastructure interventions.
	Four-tracking of the route could undoubtedly be part of that intervention. Unfortunately, if we look at it in the short term, that is unbelievably expensive. The plans developed by BAA in 2007, when it ran Stansted airport and there was higher demand, merely to three-track a section of the route were estimated to cost between £800 million and £1 billion. At the moment, such investment would represent a significant portion of the Government’s rail investment budget. It would therefore require a robust business case. In the medium term, that business case might be made, but my right hon. Friend was right to acknowledge that the Government are spending more on railway infrastructure—£19 billion between 2014 and 2019. None the less, my right hon. and hon. Friends are right to make that case, and I hear them making it.
	In the medium term, the Government are supporting the development of the Crossrail 2 proposals, which would link the West Anglia rail line with the South West main line via a tunnel under central London and free up capacity for increased services. Plans are still in the early stages, but the Government are supportive.
	In the shorter term, there are still some opportunities for us to improve capacity, reliability and journey times along the route. With the active participation and support of local stakeholders, I am keen to look at some of the short-term operational restrictions linked to level crossings and user-worked crossings. Where trains currently need to reduce speed on the approach to such crossings, I would like to see them able to maintain running speeds and therefore reduce journey times and improve operational reliability.
	The Government are looking to develop the rail investment strategy beyond 2019. That work will be influenced significantly by an Anglia route study that Network Rail is shortly to begin. The study, which is due to report in 2015, is aimed at identifying the priorities for investment in the Anglia network. Right hon. and hon. Members will also be aware that the Chancellor announced in his autumn statement that the study will place special attention on the services between London and Stansted, and that extra focus should deliver benefits to passengers right along the West Anglia rail line.
	I heard the comments by my hon. Friend the Member for Hertford and Stortford about the London First proposals, which are currently just that. In addition, the interim findings of the independent Airports Commission are due shortly. Clearly, Ministers are not aware of what its recommendations might include, but they will provide some greater clarity on the long-term future of Stansted
	airport and the future capacity that it might need regarding the rail network, and that will inform decisions regarding my hon. Friend’s constituents.
	On the Network Rail study, I encourage my right hon. and hon. Friends and, indeed, all Members representing constituencies along the route to make clear and reasoned submissions to Network Rail. It is important that those representations come from local authorities, local enterprise partnerships, businesses, passenger groups, and of course Members of Parliament. That will help to make a compelling case for future investment. I have no doubt that if that case is made, the Government’s rail investment strategy post-2019 will feature the West Anglia rail line very heavily.
	My right hon. Friend the Member for Saffron Walden asked about devolution to the Mayor and TfL. The devolution proposal applies to only three routes, it will happen post-2015, although no formal dates have been agreed as yet, and it will result in a transfer of staff and trains to the Mayor’s jurisdiction. I understand that that will probably not make my right hon. Friend as happy as my earlier announcement.

Robert Halfon: While I completely agree with my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst), will my hon. Friend consider extending Oysterisation to Harlow, as has been considered in the past, or at least examine the possibilities of smartcard technology so that the many Harlow residents who commute to London can get the benefits that people commuting from other stations, including Ware, now have?

Stephen Hammond: My hon. Friend will know that we are undertaking a smart ticketing trial in various other parts of the south-east network. I am happy to consider his proposal. If he were to write to me and seek a meeting, I would be delighted to discuss it with him in greater depth, and with any other Members who wish for the further extension of smartcards to their area.
	My hon. Friend the Member for Hertford and Stortford mentioned several times the problems we had with the storm a few weeks back. I particularly remember travelling on that line all those years ago when it was one of the worst-hit lines. I think he will recognise that in certain places a large number of trees overhang the line, more so than on many other commuter routes, simply because of its structure. I am afraid that there was also a certain amount of overhead line damage that significantly delayed the reintroduction of services. None the less, he can be assured that the Secretary of State and I, and other Ministers in the Department, took a great interest in the situation and were in discussions with Network Rail about trying to ensure that lines were brought back into service as quickly as possible.
	As I said, it is important that passengers and other interested parties influence the West Anglia route study. That is a chance to make an important contribution to the case for significant investment in the line post-2019.
	I am delighted to have been able to respond to this important debate. My right hon. and hon. Friends have rightly made the case that we should not take our eyes away from the problems of overcrowding that their constituents suffer. I have been able to talk a little about some of the investment that is going in and is planned.
	I hope that that will have given my right hon. and hon. Friends at least some reassurance that the Government take the West Anglia main line very seriously.
	Question put and agreed to.
	House adjourned.